The BHP Group Ltd (ASX: BHP) share price will be on watch on Thursday.
That's because the mining giant has just released its fourth quarter update this morning.
Image source: Getty Images
BHP share price on watch following Q4 update
Here's a summary of how the miner performed during the three months compared to the previous quarter:
- Copper production up 17% to 476.2kt
- FY23 production of 1,716.5kt
- Iron ore production up 9% to 65.3Mt
- FY23 production of 257Mt
- Metallurgical coal production up 22% to 17Mt
- FY23 production 29Mt
- Nickel production up 12% to 22Mt
- FY23 production 80Mt
What happened during the quarter?
For the three months ended 30 June, BHP finished the financial year positively with a strong operating performance.
This led to full-year production guidance being achieved for copper, iron ore, metallurgical coal and energy coal. Nickel achieved its revised guidance and finished in line with the lower end of original guidance.
In respect to copper, the miner's production was up 17% quarter on quarter to 476.2kt thanks to higher concentrate volumes at Escondida, record production from the refinery at Olympic Dam, and the addition of Prominent Hill and Carrapateena. This took BHP's FY 2023 copper production to 1,716.5kt with an average realised price of US$3.65 per pound. This is down from US$4.16 in FY 2022.
The Big Australian's iron ore operations performed positively despite the unfavourable impacts of Tropical Cyclone Ilsa. BHP reported a 9% increase in iron ore production to 65.3Mt. This reflects increased production at WAIO, as well as the tie-in activity of the Port Debottlenecking Project 1. This meant BHP's iron ore production hit 257Mt with an average realised price of US$92.54 per tonne for FY 2023. The latter is down from US$113.10 per tonne a year earlier.
Positively, full-year unit cost guidance is expected to be achieved at Escondida, WAIO and New South Wales Energy Coal (NSWEC). Whereas BHP Mitsubishi Alliance (BMA) is expected to be marginally above its revised guidance range.
Management commentary
BHP Chief Executive Officer, Mike Henry, was pleased with the company's finish to FY 2023. He said:
BHP finished the year with a strong fourth quarter, increasing annual production across the board and achieving annual records at WAIO, Olympic Dam and Spence. WAIO shipped record volumes on the back of productivity in its supply chain, rail network and car dumpers, while South Flank completed its deployment of autonomous haul trucks in May and is on track to ramp up to full production in the next 12 months.
Olympic Dam's improved reliability and productivity delivered record annual output in copper, gold and silver, and the integration of OZ Minerals into our South Australian copper business is expected to lift production to between 310 and 340 kt in FY24. At Escondida, the team managed through operational challenges to deliver solid production and position the asset to increase output further in FY24. Our Queensland coal operations achieved strong underlying performance including the transition to autonomous fleets at Goonyella Riverside and Daunia, offsetting the impact of significant wet weather.
FY 2024 guidance
Potentially good news for the BHP share price is that the miner sees scope for production growth in FY 2024.
It is guiding to copper production of 1,720kt to 1,910kt, which represents flat to 11% growth year on year.
As for iron ore, the company is expecting production of 254Mt to 264.5Mt. This would mean -1% to +3% growth over FY 2023's numbers.
It is a similar story for metallurgical coal, energy coal, and nickel, with BHP seeing the potential for decent production growth but also acknowledging that production could be down year on year.
The BHP share price is up 20% over the last 12 months.
