BHP coal cuts clear in March quarter

PREVIOUSLY announced coal cuts by BHP Billiton were evident during the March quarter, with metallurgical coal output falling by 25% compared to the previous period.
BHP coal cuts clear in March quarter BHP coal cuts clear in March quarter BHP coal cuts clear in March quarter BHP coal cuts clear in March quarter BHP coal cuts clear in March quarter

Courtesy BHP Billiton Mitsubishi Alliance.

Angie Tomlinson

While production for the nine months to March 31 was 3% higher, the previous period was marked by devastating floods in Queensland in early 2008.

Production for the nine-month year-to-date totalled 26.9 million tonnes, while March quarter output fell to 7.6Mt.

Production of metallurgical coal during the 2009 financial year is expected to be 10-15% lower.

BHP said during the quarter it was busy rebuilding depleted inventories and reducing activities as inventories approached normal levels.

For energy coal, the news was better with production in line with 2008 figures. For the nine months to March 31, energy coal production was 50.5Mt and March quarter output was 15.2Mt.

The planned closure of underground mining operations at Douglas Middelburg in South Africa was partly offset by strong operational performance at Cerrejon Coal in Colombia and the Hunter Valley mines in Australia.

The March quarter was affected by wet weather in the Hunter Valley and at Douglas Middelburg, as well as a planned longwall move at San Juan Coal in the USA.

BHP said against a backdrop of weak demand, it had achieved “sound operational results, albeit with lower production compared to the December 2008 quarter”

“In the medium term, we expect that market conditions will remain uncertain. Consistent with the way we have managed our business to date, all our operations will remain under review.

“We will continue to take appropriate actions in any business that is cash negative and set to remain so, or where there is lack of demand,” the company said.

On the development front, BHP continued its investment in developing two South African mines, the $US450 million Klipspruit operation and the $US975 million Douglas-Middelburg optimisation.

Klipspruit is 81% complete and is expected to begin producing in the second half of 2009.

Douglas-Middelburg is almost half-way complete and will begin producing in mid-2010.

In Australia, work continued on the 30Mt per annum Newcastle Third Port project, which BHP has a $US390 million, 35.5% stake in.

BHP said wharf construction was progressing well, with stacker reclaimer delivery started.

BHP was trading unchanged mid-morning today at $A31.56.

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