Mining major BHP Billiton announced a strong year of production in its production report for the year ended June 30 last week, adding that the majority of its 18 low-risk, largely brownfield major projects were scheduled to deliver first production before the end of the 2015 financial year.

Two of its major assets – the Escondida copper project, in Chile, and Western Australia Iron Ore (WAIO) – exceeded production guidance and yearly records were achieved across seven operations and five commodities, the company stated.

BHP Billiton’s total iron-ore production for the 2013 financial year increased by 7% to 170-million tons, with WAIO’s production of 187-million tons for the same year representing a thirteenth consecutive yearly production record.

“The delivery of WAIO’s capital efficient growth programme and continued strong operating performance across the supply chain contributed to the record result,” the report stated.

Record annualised shipments of 217-million tons during the June quarter reflected the successful commissioning of all major infra- structure associated with the WAIO Port Hedland Inner Harbour expansion project and the destocking of mine and port inventory built in expectation of the increase in port capacity.

“First production from the WAIO Jimblebar mine expansion, which will increase supply chain capacity to 220-million tons a year, is expected in the December quarter, ahead of schedule and, in the longer term, the progressive debottlenecking of the supply chain is expected to underpin substantial low-cost growth for our WAIO business,” said BHP Billiton.

The project is on budget in local currency, although the capital cost in US dollars is expected to be 10%, or $340-million, higher than the original budget. However, this increase has been more than offset by a change in scope and a $400-million reduction in the budget for the WAIO Port Blending and Rail Yard Facilities project, which reflects the decision to prioritise capital efficient growth in the inner harbour, the company added.

“As a result, WAIO remains well positioned to deliver 220-million tons a year of supply chain capacity, ahead of schedule and on budget,” BHP Billiton said.

WAIO production is expected to increase to about 207-million tons in the 2014 financial year.

Meanwhile, production from the company’s Escondida copper project increased by 28% to 1.1-million tons in the 2013 financial year, as the average copper grade mined rose to 1.4% and milling rates improved.

This strong level of performance was expected to be sustained during the 2014 financial year before increasing to about 1.3-million tons in the 2015 financial year, BHP Billiton stated in the report.

On June 30, the company had 283 753 t of outstanding copper sales that were revalued at a weighted average price of $3.08 a pound. The final price of these sales will be determined in the 2014 financial year.

In addition, 278 547 t of copper sales from the 2012 financial year were subject to a finalisation adjustment this year. Provisional pricing and finalisation adjustments will decrease earnings before interest and tax by $224-million in the 2013 financial year. In the 2012 financial year, the loss was $265-million.

Further, BHP Billiton’s metallurgical coal production increased by 13% in the 2013 financial year to 38-million tons.
Production at its Queensland Coal project, in Australia, increased by 54% for the June quarter, compared with the previous corresponding period, to an annualised rate of 61-million tons.

Further, also in Queensland, this strong performance was underpinned by record yearly production at Peak Downs and South Walker Creek, and was achieved despite the indefinite closure of Norwich Park and Gregory.

“The continued ramp-up of Daunia and future commissioning of Caval Ridge, both of which delivered first production this year, will underpin an increase in the capacity of our Queensland Coal business to 66-million tons a year by the end of the 2014 calendar year.

“Notwithstanding the strong increase in production expected, a longwall move at Crinum and scheduled maintenance at Goonyella Riverside and Peak Downs will impact on production in the September quarter.”
The company’s total energy coal production increased by 3% in the 2013 financial year to 73-million tons.

Meanwhile, despite strong performance from its onshore US assets, extended maintenance and drilling delays at BHP Billiton’s non- operated Gulf of Mexico assets constrained its petroleum production growth to 6% during the 2013 financial year.

BHP Billiton’s onshore US drilling and development expenditure totaled $4.8-billion in the 2013 financial year, and reflected a higher working interest across several fields and an increase in drilling speed, which delivered more wells per rig and a higher rate of completion activity.

“More than 80% of our onshore US expendi- ture was directed towards the Eagle Ford and Permian basin operations in Texas, as planned. An improvement in drilling productivity is expected to facilitate a reduction in our rig count in the 2014 financial year, while a lower level of capital expenditure for Onshore US will be increasingly focused on our liquids-rich acreage in the Eagle Ford basin,” BHP Billiton stated.

Meanwhile, BHP Billiton’s greenfield minerals exploration was focused on advancing its copper targets in Chile and Peru. Minerals exploration expenditure for the 2013 financial year was $651-million, of which $500-million was expensed.