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BHP Billiton in 3Q15: Copper Production a Beat

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Copper production

BHP Billiton (BHP) total copper production for the nine months ended March 2015 increased by 2% year-over-year, up to 1.3 million tons.

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BHP operational  highlights

Escondida copper production for the nine-month period increased by 7% YoY (year-over-year) to 891,000 tons. Escondida delivered a strong operating performance, including a 14% increase in truck use. Strong performance was, however, offset by severe, wet weather in March 2015, water restrictions, and industrial action in Northern Chile.

Pampa Norte production was 15% higher YoY for the nine-month period, up to 192,000 tons. Higher recoveries at the Spence operations resulted in higher production overall.

Olympic Dam production, on the other hand, decreased by 15% for the nine-month period, down to 111,000 tons. This was due to an electrical failure that caused a mill outage in January 2015. The mill is now expected to be offline for approximately six months, which will cause copper production to decline in fiscal 2015.

Copper production at this mine also decreased by 32% for the nine-month period, down to 80,000 tons. Lower grades offset the record mill throughput. BHP maintains that average grades at Antamina are expected to remain broadly unchanged in the June 2015 quarter.

Guidance reduced

BHP has reduced its copper production guidance for fiscal 2015 to 1.7 million tons, which is 6% below its previous guidance. The downward revision is mainly due to the following:

  •  the impact of heavy rainfall in Northern Chile in March 2015
  •  an electric outage that caused a mill outage at the Olympic Dam in January 2015

Teck Resources (TCK) reported its first-quarter results on April 21. Teck copper volumes were also lower than expected in 1Q15, but mainly due to the timing of shipments. Southern Copper (SCCO) is expected to report in late April. Freeport-McMoRan (FCX) is due to announce its first-quarter results on April 23 2015.

FCX forms 4.1% of the SPDR Metals and Mining ETF (XME). This ETF invests in diversified metals and mining companies.

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