By Sneha Kumar
April 22 (Reuters) – BHP Group beat market estimates for third-quarter iron ore output on Wednesday and said its annual copper production would come in at the upper half of its forecast range, sending its shares up about 2% to their highest in seven weeks.
The world’s largest listed miner also said it had concluded talks with China Mineral Resources Group (CMRG), the state iron ore buyer, ending a months-long dispute stemming from bans on the procurement of the key steel-making ingredient from BHP.
The confirmation of a deal came a fortnight after BHP’s incoming CEO Brandon Craig visited China. A week ago, Reuters reported that CMRG had notified some domestic steel mills that they were free to buy BHP’s seaborne cargoes.
“Ending the CMRG dispute is a win that quietly de-risks the iron ore earnings base,” said Josh Gilbert, a market analyst at stock and crypto trading platform eToro.
“Iron ore remains the cash engine that funds everything else BHP is building, and a clean relationship with its biggest buyer is fundamental for the business.”
Over the past six months, CMRG had banned purchases of certain BHP ore types, including Jimblebar fines in September.
That was reflected in BHP’s production report for the March quarter, which showed that output from Jimblebar, part of its Western Australia Iron Ore operations (WAIO), nearly halved sequentially to 10.9 million metric tons.
However, robust output from other sites pushed quarterly WAIO iron ore output on a 100% basis to 69.8 million tons, topping the Visible Alpha estimate of 68.9 million tons and higher than the 67.8 million tons logged a year earlier.
Copper production slipped 7% from last year to 476.8 thousand tons, below the Visible Alpha consensus of 479.2 thousand tons, due to weak performance at the Escondida and Pampa Norte operations in Chile.
However, the miner said it expected annual copper production in the upper half of its forecast range of 1.9 to 2 million tons. Copper contributed more to BHP’s first-half earnings than iron ore.
Shares of the miner rose as much as 1.8% to A$56.490 by 0331 GMT, hitting their highest since March 3, outperforming the mining sub-index, which was last up 0.3%.
“These results reflect the consistency of our operations and the strength of our high-margin diversified portfolio in an evolving operating environment,” outgoing CEO Mike Henry said.
Brandon Craig, a 25-year BHP veteran, will take over from Henry as CEO at the start of the company’s new financial year on July 1.
On Tuesday, Rio Tinto, the world’s largest iron ore producer, reported higher first-quarter iron ore production and sales, as well as copper output.
(Reporting by Sneha Kumar and Sameer Manekar in Bengaluru; Editing by Maju Samuel and Subhranshu Sahu)
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