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BHP Billiton Reports Strong Production Results, Upgrades Guidance

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Production results: A beat

Overall, BHP Billiton (BHP) reported better-than-expected 3Q15 production results on April 22. It recorded a 9% production increase during the nine months ended March 2015. Ten operations and five commodities reported record production in the nine-month period. BHP commented that it remains on track to realize 16% production growth over a two year-target period ending in 2015. BHP’s financial year runs from July 1 to June 30.

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Hits and misses

BHP metallurgical coal volumes were strong again this quarter. Production increased by 14% to 38 million tons.

Petroleum production was also strong, with volumes almost in line with expectations due to strong liquids volume. Volumes increased by 6% to a record 193 MMboe (millions barrels of oil equivalent).

Iron ore production was also a beat on market expectations. For the nine months ending March 2015, production came in at a record 172 million tons, which is growth of 17%. Guidance for iron ore production in fiscal 2015 was also upgraded.

BHP copper production came in at 1.3 million tons for the nine months ended 2015, beating expectations as well. Production increased by 9% quarter-over-quarter to 460 thousand tons.

Comparable results

Rio Tinto (RIO) announced its production results for the quarter ended March 2015. They were broadly in line with estimates, but the iron ore production fell short mainly because of wet weather throughout the period and its impact on operations.

Brazilian miner Vale (VALE) will report its results for the quarter ending March 2015 on April 30. Cliffs Natural Resources (CLF) will announce its results for the first quarter of 2015 on April 28. Alcoa (AA) reported its 1Q15 earnings on April 8, which were broadly in line with expectations. Freeport-McMoRan (FCX) is scheduled to report its 1Q15 earnings on April 23, before market opening. Alcoa and Freeport form 3.7% and 4.1%, respectively, of the SPDR S&P Metals and Mining ETF (XME).

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