BHP Billiton Ltd/Plc, the world's top miner, reported a raft of annual production records on Tuesday, led by strong fourth-quarter gains in copper, nickel and coal. Sweeping industrial modernisation and urban growth in China has led a boom in demand for and prices of minerals, with BHP and rivals producing as much as possible in response.
BHP said strong demand underpinned record annual output for natural gas, alumina, aluminium, copper, nickel, iron ore, manganese ore and metallurgical coal - used in steel making - while output rose for energy coal and diamonds.
Analysts said the quarterly result was solid with no surprises for the company's main commodities, but the mining giant could find it difficult to maintain the rapid pace of growth despite expansion plans at many projects.
"We're going to see continued growth but more moderate increases," said Gavin Wendt, mining analyst at independent research house Fat Prophets. "Over the next couple of years they could continue to tweak things to get production higher ... but the rate of growth we've seen over the past 6-12 months is going to be hard to sustain."
Shares in BHP, which is expected to post a roughly 32 percent rise in full-year net profit to about US $13.8 billion on August 22, added 0.9 percent to A$38.62 in an ocent rise to 342,100 tonnes in the three months to June 30 driven by extra production at its giant Escondida and Spence projects in Chile, where it has added new capacity. BHP's base metals division, chiefly copper, accounted for almost a third of last year's overall earnings.
BHP, which has earmarked $17.5 billion for 29 new projects, is nearing completion of its Ravensthorpe nickel mining and smelting project despite big cost overruns, has plans to ramp up iron ore output in far western Australia, and is considering expanding its Australian Olympic Dam copper and uranium project.
"It's delivery of their expansions that will bring the extra tonnes," said ABN Amro analyst Rob Clifford. "They're still busily expanding in areas like iron ore, Olympic Dam is still not running at full potential and they're bringing Ravensthorpe on line," he said.
The miner has also been linked to a possible bid for Alcoa in the wake of rival Rio Tinto's $38 billion bid for Alcan Inc A media report said last week BHP was no longer considering an offer, while the company has refused to comment.
Among BHP's major commodities, iron ore production rose 6 percent in the fourth quarter to 25.75 million tonnes, and nickel output jumped 15 percent to 47,700 tonnes. Aluminium output was flat at 334,000 tonnes, but metallurgical coal output jumped 21 percent to 11.13 million tonnes, while energy coal output rose 2 percent.
BHP said constraints on third party port and rail infrastructure on Australia's east coast would hold back export coal sales in the near term. Crude oil and condensate production fell 1 percent to 11.44 million barrels, with annual output flat as natural field decline was offset by improved facility performance.
Annual uranium output fell 11 percent due to lower ore grades and maintenance at BHP's Australian Olympic Dam mine. The miner said it was forced to buy ore on the spot market to meet contractual requirements, which would reduce 2006/07 earnings before interest and tax by $81 million.