BHP Billiton has cut production guidance for copper, iron ore and coking coal for the 2017 financial year due to industrial action at a copper mine Chile and bad weather in Australia, which affected its iron ore and coal mines.
The world’s biggest miner by market capitalisation reduced its guidance for copper production in financial year 2017 by as much as 18 per cent to between 1.33m tonnes and 1.36m tonnes following a 44 day strike at its Escondida mine in Chile. Workers at the mine, which is operated by BHP, have recently returned to work enabling production to resume, although talks on a new wage deal are expected to resume next year.
Damage to rail infrastructure in Queensland caused by cyclone Debbie has forced BHP to cut production guidance for coking coal to between 39m and 41m tonnes, from 44m tonnes. The miner also narrowed its iron ore guidance to between 231m and 234m tonnes, from between 228m and 237m tonnes. BHP said record production at its iron ore mines Western Australia in the first nine months of 2017 was partially offset by wet weather in the March quarter.
The announcement of reduced guidance for several key commodities comes as BHP continues to fend off a public campaign by activist hedge fund Elliott Advisors, which is pressing the miner to reform its corporate structure and spin off its oil division. BHP has rejected the proposals as “financial engineering” and noted there were major flaws in Elliott’s restructuring plan.
In a statement on Wednesday, Andrew MacKenzie, BHP chief executive, said BHP was not standing still and that everything the company does is “designed to create value for all our shareholders”.
“We have significantly reduced the capital intensity of our growth options and changed our approach in shale to improve returns and lower risks on new investments,” he said.