JOHANNESBURG (miningweekly.com) – Diversified mining group BHP Billiton, which narrowly missed its iron-ore production guidance for the 2016 financial year, aims to grow its copper, iron-ore and metallurgical coal production in the next financial year by focusing on improving its productivity.

Reporting on the group’s 2016 operational performance, CEO Andrew Mackenzie said on Wednesday that BHP Billiton would take advantage of latent capacity and would continue to invest in low capital projects to increase its copper production by 5%, boost its metallurgical coal output by 3% and to deliver up to a 4% increase in iron-ore production.

BHP Billiton missed its 2016 iron-ore guidance of 229-million tonnes, which it lowered in April, by three-million tonnes to produce 227-million tonnes in the year ended June 30. Record production from the Western Australian Iron Ore (WIAO) operations was offset by the suspension of operations at the Samarco joint venture (JV), in Brazil, where an environmental disaster in late 2015 shut operations.

On a 100% basis, the WAIO produced a record 257-million tonnes in the financial year, which was a 2% improvement on 2015’s output. BHP aims to increase production from WAIO by up to 7% in 2017 to between 265-million tonnes and 275-million tonnes, underpinned by a rail improvement programme, a focus on productivity and the ramp-up of additional capacity at the Jimblebar mining hub. These initiatives will increase the system capacity in the Pilbara to 290-million tonnes a year in the 2019 financial year.

The group has set a guidance of between 228-million tonnes and 237-million tonnes for total iron-ore production for the 2017 financial year, excluding production from Samarco, which remains suspended.

Mackenzie has also outlined plans to grow copper production, setting a guidance of 1.7-million tonnes for 2017. Total copper production for the 2016 financial year decreased by 8% year-on-year to 1.6-million tonnes as a grade-related decline at Escondida, in Chile, offset improved operating performance across the copper operations.

Copper production from Escondida, in which BHP Billiton owns 57.5%, decreased by 20% to 979 000 t in the 12 months ended June 30, with the group citing an expected 28% grade decline.

BHP Billiton confirmed the approval of a $180-million Los Colarados Extension project, which the Escondida Owners Council approved last month. The expansion will add incremental capacity of 200 000 t/y in the near term, with first production expected in the second half of the 2017 financial year. The mine is expected to produce 1.07-million tonnes in the 2017 financial year, as the Escondida Water Supply project is nearing completion. The project entails a new desalination facility to ensure continued water supply to the mine and is 93% complete.

Metallurgical coal production for the 2016 financial year increased by 1% to a record 43-million tonnes and exceeded BHP Billiton’s guidance of 40-million tonnes. BHP Billiton reported that it would increase production further to 44-million tonnes in 2017, despite the planned divestment of its 75% interest in IndoMet Coal, in Indonesia, to its JV partner.

Energy coal production decreased by 16% to 34-million tonnes in 2016 and is forecast to decrease further to 32-million tonnes as productivity improvements at the group’s New South Wales operations offset the divestment of energy coal assets in New Mexico.

Petroleum production for 2016 was 240-million barrels of oil equivalent, comprising 109-million barrels of onshore production and 131-million barrels conventional production. BHP Billiton has set a lower guidance of between 200-million and 210-million barrels of oil equivalent for 2017, owing to a reduction in capital expenditure (capex) and development activity.

Capex for petroleum in 2016 was slashed by 50% to $2.5-billion and a further 44% reduction to about $1.4-billion is planned for 2017.