Resource News

BHP Billiton hits all-time high as Chinese demand heats up

BHP Billiton, the world’s largest miner, today reported record production in iron ore on the back of increased Chinese demand, while a significant amount of ore had been sold into the spot market.

The mining major, reporting its half-year results today, said demand in China and restocking in the developed world had led to strong price recovery across the commodity suite during the quarter.

“Going forward, the speed of recovery in the developed economies remains uncertain, particularly considering the eventual withdrawal of government stimulus,” BHP said in its report.

“In China, the impact of measures to control loan growth will add another future variable. Consequently, we expect some degree of volatility in the short-term outlook for our commodities.”

BHP added that most key indicators across the developed economies showed improvement in the December quarter, and Government stimulus measures had supported a gradual return to normalised global trade.

The iron ore division reached records for production and shipments, which BHP said had been achieved with the improvements in rail and port infrastructure under the Western Australia Iron Ore Rapid Growth Project 4 (RGP4).

BHP said the ramp up of RGP4 was continuing, and full capacity was expected to be achieved by the end of 2011.

“Including RGP4, the full installed capacity across the Western Australia Iron Ore operations is 155 million tonnes per annum,” BHP said.

A strong result was expected from the mining major after Rio Tinto last week beat annual forecasts for iron ore and copper output.

Rio said most of its key commodities were recovering and iron ore had set a production record of 217m tonnes, up 13 per cent on the previous year.

Production for BHP rose 11 per cent to 32.45m tonnes in the three months ended December 31.

The Melbourne-based miner said that 54 per cent of Western Australia Iron Ore shipments – on a wet metric tonne basis – were based on annually agreed pricing, and the remainder had been sold on shorter-term reference pricing.

The spot price of iron ore is now about 90 per cent above the current benchmark, which is expected to give the mining giants more power in the negotiations for this year’s contract talks.

BHP’s ability to sell material at spot and indexed prices could also help boost earnings from the division.

Production records were also set for petroleum, nickel and zinc. BHP’s output of petroleum, its third-biggest earner, rose 16 per cent to 38.4m barrels of oil equivalent.

Uranium production from Olympic Dam was 60 per cent lower, as repair work on the damaged main ore-transport shaft continued…read more at The Australian