BHP Billiton’s Pilbara iron ore production rose under 15% for fiscal year 2015 (FY15), but enough to send shivers through the Australian stock market and iron ore juniors.
The iron ore output of 254 million tonnes for the year, up 13%, according to BHP’s operations review for the year ended 30 June, released on 22 July.
The output came despite a sharp decline in the price of ore to around USD50 a tonne. The announcement fanned fears of a world glut threatening another price slump putting juniors like Atlas, BC Iron, Mount Gibson, and Arium out of business.
Despite this, the world’s third-largest exporter is also forecasting another 6% production increase for 2016. Output for BHP exceeded its earlier projection of 230 million tonnes announced in April.
CEO Andrew MacKenzie, however, stressed the increase in production was mainly down to productivity improvements, rather than further expansion.
“Better productivity will be the sole source of volume growth at Western Australia Iron Ore in the 2016 financial year,” MacKenzie said in a statement on 22 July. “Production [is] forecast to increase by 7%, costs are expected to fall to USD16 per tonne.”
Its new investment in port productivity will include the upgrade of workshop facilities, operational and service berths, and two small boat moorings at the existing Nelson Point Tug Harbour.
“The project will mitigate the risk of a channel blockage by ensuring the continued safe escort of vessels in and out of the Port Hedland Inner Harbour,” BHP Billiton iron ore president Jimmy Wilson said on 21 July.
“[It] will enable BHP Billiton to safely meet projected demand for tug services and effectively manage shipping risk for all users of the Port Hedland.”
On 21 July, BHP approved USD240 million to purchase six additional tugs and construct a new eight-pen tug harbour at Hunt Point, Port Hedland.
Work on the port is scheduled to commence in the December 2015 quarter but require minimal dredging and marine-based infrastructure.
Meanwhile, BHP’s metallurgical coal production increased by 13% to a record 43 Mt for FY15, but it is was down USD2.8 billion on its US shale gas business.