BHP’s Q4 iron ore, coal production pulled down by labour constraints

Global miner BHP Group (NYSE: BHP ASX: BHP) has seen its iron ore and coal production decline in the fourth quarter of fiscal 2022 over the previous year due to Covid-related labour constraints.

“BHP produced a strong fourth quarter to cap off a year of significant progress. Our performance for the year has been underpinned by safe, reliable operations and firm demand for our commodities," BHP chief executive officer Mike Henry stated in a press release.

Iron ore output from BHP's Western Australian operations was 71.7 million tonnes in Q4, compared to 72.8 million from a year ago. For the full year, iron ore production totalled 282.8 million tonnes, meeting its fiscal 2022 guidance. The company also lifted its forecast for the following year to 278-290 million tonnes.

Metallurgical coal production saw a more significant quarter-on-quarter drop at 9% to 16.4 million tonnes, resulting in a full-year decline of 9% to 58.3 million tonnes. Thermal coal, too, fell 13% and 4% for the quarter (3.9 million tonnes) and year (13.7 million tonnes) respectively. Besides weather impacts and a labour crunch, BHP's coal production was partly hit by an increase in coal royalties by the Queensland government. The coal production decline also followed the sale of 80% of the company's stake in the BHP Mitsui coal joint venture, its leading coal producing avenue in Queensland.

Still, the company has met its 2022 coal production guidance, and expects to produce 58 million to 64 million tonnes of metallurgical coal and 13 million to 15 million tonnes of thermal coal the next fiscal year.

"Queensland metallurgical coal delivered strong underlying performance for the quarter in the face of significant wet weather," Henry added. BHP is currently assessing the impacts on the BHP-Mitsubishi alliance economic reserves and mine lives as a result of the increase in coal royalties.

"The near tripling of top end royalties has worsened what was already one of the world’s highest coal royalty regimes, threatening investment and jobs in the state," he explained.

In other commodities, production of both copper and nickel were lower for the year, at 1.6 billion tonnes and 76.8 million tonnes respectively. Full-year copper output, despite a 15% improvement in the fourth quarter with record material mined and near-record concentrator throughput at the Escondida mine in Chile, was still down 4% in fiscal 2022.

A detailed report of BHP's fourth quarter and fiscal 2022 operational results can be found at www.bhp.com.