The BHP Group Ltd (ASX: BHP) share price has started in the green this morning after giving investors an update.
BHP is a world-leading resources company, extracting and processing minerals (like iron ore and copper), oil and gas, and has more than 62,000 employees and contractors, primarily in Australia and the Americas. Headquartered in Melbourne, BHP has shares listed on both the ASX and London Stock Exchange (BHP Billiton Plc).
Why the BHP share price is higher
The BHP share price is currently 0.7% higher in early trade after announcing what effects the recent wild weather has had on its Western Australia Iron Ore operations.
BHP outlined that operations are slowly returning to normal after Tropical Cyclone Veronica affected BHP’s Port and Rail Operations in Port Hedland.
Although the mining giant couldn’t see any major damage, there has been cases of flooding both on the site and on sections leading into the port, which is limiting train movements.
Therefore the port is operating at a reduced rate and the resources business doesn’t expect a return to full capacity until later this month.
The effect on BHP’s production
BHP’s initial estimates show that Veronica will cause a reduction of production of approximately 6 million to 8 million tonnes. As a result, the mining giant is assessing its 2019 financial year production and unit cost guidance.
At the company’s half year result BHP guided it was expecting 273Mt to 283Mt from it Western Australia Iron Ore division, with unit cash costs of less than US$14 per tonne.
The final production impacts and revised production and unit cost guidance will be disclosed once they are finalised.
Are BHP shares a buy?
The best time to buy shares of a cyclical business is when they are at a low point, not a reasonably strong time such as now. 2016 would have been a very opportunistic time to buy.
For now, I think it is better to focus on ASX businesses that can keep growing revenue and profit regardless of what the commodity cycle is doing. That’s why some of the shares in the FREE report below are compelling ideas to me.
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