BHP is expecting China will be the strongman behind commodities demand in 2023, due to the country’s measures to support its property sector.
The statement from BHP was delivered alongside the announcement that it posted higher quarterly iron ore shipments that beat expectations.
While developing nations facing economic headwinds, BHP and Rio Tinto expect that China will underpin solid demand for their steel-making products.
BHP said, “China’s pro-growth policies, including in the property sector, and an easing of COVID-19 restrictions are expected to support progressive improvement from the difficult economic conditions of the first half.”
However, Rio Tinto also said this week that China’s reopening from COVID-19 restrictions could raise near-term risks of labour and supply chain shortages.
The world’s largest listed miner said iron ore production from mines it operates Western Australia was 74.3 million tonnes for the three months ended December, up one per cent from 73.9 million tonnes a year earlier and beating a consensus of 71.9 million tonnes.
The mining giant reaffirmed its fiscal 2023 forecast for Western Australian iron ore output at between 278 million tonnes and 290 million tonnes.
BHP raised cost guidance for its coal divisions, blaming inflation and after floods impacted operations this year, while reiterating that it would not make major investments in Queensland because that state had raised royalty payments.
“We see strong long-term demand from global steelmakers for Queensland’s high-quality metallurgical coal, however in the absence of government policy that is both competitive and predictable, we are unable to make significant new investments in Queensland.”
BHP boosted unit cost guidance for coal-mining joint venture BHP Mitsubishi Alliance to between US$100 and US$105 per tonne and unit cost guidance for New South Wales energy coal division to between US$84 and US$91 per tonne.
In copper, production at the Escondida in Chile was impacted by road blockades that disrupted supply of materials to the mine.
BHP said production at its Olympic Dam copper operation in South Australia had more than doubled to a near-record level after the completion of smelter maintenance. BHP plans to take over neighbouring copper producer Oz Minerals.
However nickel output fell by two per cent to 38,000 tonnes, reflecting the slower than expected ramp up of BHP’s Nickel West refinery following planned maintenance in the December quarter.
Shares edged up by 0.3 per cent to A$49.40.
