BHP OPERATIONAL REVIEW FOR NINE MONTHS ENDED 31 MARCH 2020
Our highest priority is the safety, health and wellbeing of our workforce and communities. We have taken action to reduce the spread of COVID-19.
- Our financial position is strong. Underpinned by our low-cost operations, our business is resilient and expected to continue to generate solid cash flow.
- Record production was achieved at Western Australia Iron Ore (WAIO) and Caval Ridge, while record average concentrator throughput was delivered at Escondida and record ore was stacked at Spence.
- Production guidance for the 2020 financial year remains unchanged for petroleum, iron ore and metallurgical coal. Copper guidance for our operated assets is broadly unchanged and Antamina guidance is under review following temporary suspension of operations due to COVID-19. Energy coal production guidance is under review with Cerrejón placed on temporary care and maintenance due to COVID-19.
- Our major projects under development in petroleum and iron ore are tracking to plan. As a result of measures put in place to reduce the spread of COVID-19, the Spence Growth Option schedule and timing for completion of the shafts at Jansen are under review.
- We have flexibility in our capital and exploration expenditure. We are reviewing our guidance for the 2021 financial year and it will be lower than the current guidance of around US$8 billion. We will provide updated guidance with our full year results.
Iron ore – Total iron ore production increased by three per cent to 181 Mt (205 Mt on a 100 per cent basis). Guidance for the 2020 financial year remains unchanged at between 242 and 253 Mt (273 and 286 Mt on a 100 per cent basis).
Western Australia Iron Ore (WAIO) achieved record production, with higher volumes reflecting record production at Jimblebar and the impact of the train derailment in the previous period. Weather impacts from Tropical Cyclone Blake and Tropical Cyclone Damien were offset by strong performance across the supply chain, including improved car dumper reliability, with completion of a major car dumper maintenance campaign in October 2019, implementation of improved maintenance strategies, and delivery of consistent performance across our mine operations. This strong performance has resulted in healthy stock levels across our mines.
Consistent with our revised mine plan, Jimblebar fines Fe grade has improved during the March 2020 quarter, with the typical specification expected to return to above 60 per cent in the June 2020 quarter.
WAIO continues to focus on operating safely and has incorporated a series of preventative measures to help reduce the spread of COVID-19. We have reduced the number of workers on our sites, with those not critical to operations working from home. To meet border controls introduced by the Western Australian Government, over 900 employees and contractors in business critical roles have been temporarily relocated to Western Australia, including the majority of specialist roles who are based interstate, such as train drivers and train load out operators.
Mining and processing operations at Samarco remain suspended following the failure of the Fundão tailings dam and Santarém water dam on 5 November 2015. Approval of the Corrective Operating Licence (LOC) for Samarco’s operating activities at its Germano Complex was received in October 2019. As a result of precautions taken for COVID-19, operation readiness activities for restart have been slowed, with only critical activities being undertaken. Restart can occur when the filtration system is complete and Samarco has met all necessary safety requirements, and will be subject to final approval by Samarco’s shareholders.
The South Flank project is tracking well and remains on schedule for first production in the 2021 calendar year. As at the end of March 2020, approximately 80 per cent of the contracts awarded are being performed in Australia, of which 95 per cent is within Western Australia. Some interstate employees have relocated to Western Australia to help with the project delivery. Consistent with our operations, the South Flank project continues to implement increased measures to conduct safe operations in compliance with strict health and travel guidelines put in place to help reduce the spread of COVID-19.