Coal news and updates

BHP Billiton has reported strong increases in iron ore and metallurgical coal production for the final quarter of 2013 and says its focus on financial discipline puts it in a good position to reward shareholders.

The world’s biggest mining company said on Wednesday that iron ore production rose 16 per cent to 48.8m tonnes in the three months to the end of December while that of metallurgical coal hit record levels in the second half of last year.

 

Andrew Mackenzie, BHP chief executive, said the company was focusing on boosting productivity at its operations while maintaining strict financial discipline.

“We also remain committed to actively manage our portfolio for value,” he said in a statement. “This strategy leaves us well positioned to deliver a substantial increase in free cash flow and higher returns to shareholders.”

While some analysts had predicted slightly higher iron ore production, “this is a pretty solid set of numbers from BHP, which are on forecast,” said Brenton Saunders, analyst at BT Investment Management, a holder of BHP stock. “Most of the big mining companies are singing from the same hymn sheet at the moment – cutting costs, boosting efficiency and productivity.”

BHP and many of its peers bear the scars of a decade-long boom in mining investment and are refocusing their operations to cut costs, increase efficiency and boost shareholder returns.

Last week Rio Tinto announced a similarly robust set of production figures for the fourth quarter and signalled that it is beginning to dig itself out of a debt mountain amassed from misguided acquisitions and heavy investment over recent years.

Mr Mackenzie, who marks his first anniversary as chief executive next month, said BHP’s productivity agenda was in full swing and would carry strong momentum into the second half of the financial year.

Shares in BHP were down 1.8 per cent at A$37.28 mid-afternoon on Wednesday in Sydney, where the broader market was off 0.7 per cent amid a general weakness in mining stocks.

Investors have expressed concerns about weakening demand for commodities from China as its economic growth slows. The price of iron ore, a key ingredient in steelmaking, has fallen over the past fortnight as declining steel prices in China and anti-pollution regulations curb demand.

In its latest quarterly production update, BHP projected capital and exploration expenditure in 2014 at $16.1bn, which compares to $22bn in the 2013 financial year. The company maintained its own production guidance across all its main businesses – petroleum, copper, iron ore and coal.

It said metallurgical coal production increased by 22 per cent in the second half of 2013 to a record 22m tonnes. Iron ore production at the company’s western Australia operation also hit record levels in the same period at 108m tonnes.

 

Source: http://www.ft.com/