Australia’s largest miner BHP Group Ltd (ASX: BHP) has moved into the red today after announcing a first quarter activities update.
The BHP share price is currently down 1.68% to $38.53.
Production down across portfolio
Across large parts of its portfolio, BHP recorded lower output.
Planned maintenance and the impacts of labour shortages impacted iron ore production. BHP produced 63.3 metric tonnes (Mt), 3% below the June quarter and 4% below the previous year’s September output.
Similarly, Copper production decreased 7% against the prior year due to lower volumes and maintenance delays due to border restrictions.
Notably, metallurgical coal production was markedly down 25% compared to the prior quarter to 8.9Mt. Similar to iron ore, planned maintenance and mining in higher strip areas impacted output.
Coal prices have been soaring recently amid rising global demand.
Nickel production fell materially, down 21% compared to last quarter due to planned maintenance.
Positively, Petroleum output increased 2% compared to the June quarter and 3% to last year’s production due to higher production and seasonal gas demand.
“BHP’s operations delivered reliably during the first quarter and we completed planned major maintenance activities across a number of our assets. We continue to skilfully navigate the ongoing challenges of COVID-19″ – CEO Mike Henry
The business has reaffirmed its production and unit cost guidance for FY22.
New projects remain on track
Development projects including the $5.7 billion Jansen Stage 1 potash project and US$544 million Shenzi North project in the US Gulf Of Mexico were approved during the quarter.
Additionally, the Jansen shaft project is 96% complete. And then the Trion oil project in Mexico is expected to progress to a final investment decision in the mid-calender year 2022.
Corporate update
In August, BHP announced a merger of its Petroleum business with Woodside Petroleum Limited (ASX: WPL).
The agreement is expected to take place next month. Following the receipt of all approvals, the merger should complete in June next year.
Additionally, the planned removal of the dual listing structure is expected to be completed by March next year.
My take
BHP is juggling a lot of balls (rocks?) at any one time across its portfolio of assets.
Mining businesses are outside my circle of competence. But if pressed for my pick, I think Deterra Royalties Ltd (ASX: DRR) is my preferred exposure in the space.
