[miningmx.com] — BHP Billiton, the world’s biggest mining house, reported a jump of 7% in iron ore production for the March quarter on Wednesday, but warned that persistent rains in Australia were delaying a recovery in its coal operations.
The company’s production of steel-making coal is mostly centred on the Bowen Basin in northeast Australia, which was inundated by record floods in the quarter, and water-logged pits are taking much longer to return to normal as rains persist.
BHP Billiton said wet conditions were likely to continue to affect its operations there for the remainder of calendar 2011, further setting back market hopes for a quicker recovery.
Water pumping equipment suppliers said they had been stretched by the persistent rains, which have continued, albeit to a slighter extent, beyond the typical March end to the wet season.
“We allowed six months and it looks more like nine,” said UBS head of resources research Glyn Lawcock.
Lawcock said the delays should support metallurgical coal prices, which stand at around $300 a tonne and had been expected to fall over the rest of the year as production bounced back.
“They may drift a bit slower than we had anticipated given volumes are going to be slow to come back,” he said.
Fellow miners Rio Tinto and Wesfarmers reported falls of 12% and 34% respectively in March quarter metallurgical coal output due to floods.
“There are still quite a lot of pits across the Bowen Basin with a lot of water in them,” said Dave Walker, who manages water pumping for Total Water Management, which specializes in draining mines.
“There’s no equipment available right now, it’s all out,” Walker said. “And that’s contributing to delays in the recovery.”
BHP flagged in January that the Queensland floods would hit sales and production of coal through at least the first half.
“Force majeure remains in place for the majority of our Bowen Basin products with production, sales and unit costs likely to be impacted, to some extent, for the remainder of the 2011 calendar year,” the miner said in a statement on Wednesday.
BHP Billiton’s production of iron ore, it biggest single commodity, jumped to 33.2 million tonnes in the March quarter, up 7% from a year earlier, but eased 1% on the previous quarter because of Australia’s wet summer.
The north Australian floods sent steel-making coal output tumbling 18% from a year earlier.
Australian oil and gas producer Santos also reported a big drop in March quarter output, cut its full-year production forecast because of adverse weather, and warned it would take months to return operations to normal after the disruptions caused by rains.
BHP Billiton is the world’s largest supplier of traded hard coking coal, via a joint venture with Japan’s Mitsubishi Corp , and is also the third-largest iron ore producer – positions that have enabled it to reap record profits from surging demand from Asian steel-makers.
In iron ore production, BHP ranks behind Brazil’s Vale and Britain-based Rio Tinto .
Strong demand from China, the world’s top steel producer and iron ore consumer, and tight supplies have pushed iron ore prices to record highs this year, with spot price now standing around $180 a tonne, just below their February all-time high of around $200.
This should help drive a swift recovery in iron ore production in the current quarter.
In copper, another commodity in strong demand from China and other rapidly industrialising nations of Asia, BHP Billiton reported a 19% jump in March quarter output, from a year earlier when production had been disrupted by a mine accident.
The recovery in copper production was in line with BHP Billiton’s previous guidance.
