BHP Increases Fiscal 4Q Output

Zacks

BHP Billiton Plc. (BHP), a natural resources company, reported improved quarterly year-over-year production data, ended Jun 2013, for most of its business segments.

The company saw an improvement in the production of copper, zinc, iron ore, coal, add total petroleum products, aluminium and manganese alloy, to name only a few. However, the production of silver, nickel and diamonds decreased year over year.

BHP’s iron ore production shot up 17% year over year in the Jun 2013 quarter. Western Australia Iron Ore (:WAIO) production reached 187 million tonnes for fiscal 2013. The production is expected to increase further to 207 million tonnes by fiscal 2014. Recently, another mining giant, Rio Tinto plc (RIO) also reported improved production of most of its commodities, including record half year production of iron ore.

BHP sold its stake in the EKATI Diamond Mine (Canada) in the quarter, which led to a plunge of 90% in the diamond production year over year.

BHP is keen on starting its projects on schedule, while some of the projects start production ahead of schedule. While WAIO Jimblebar Mine Expansion is expected to start production in December this year, Daunia and Broadmeadow Life Extension, started their production in the reported quarter, both ahead of schedule.

BHP has roughly 18 projects in the development and exploration field, which are expected to start production before the end of fiscal 2015. The company had allocated roughly $651 million for the minerals exploration expenditure for fiscal 2013, of which only $500 million have been spent.

BHP is expected to release its fiscal 2013 earnings on Aug 20, 2013. The Zacks Consensus Estimate stands at $4.69 per share, reflecting a year-over-year drop of 26.7%.

BHP Billiton faces industry-wide pressure from equipment shortages, labor crises, and volatile metal and mineral prices. The company is also adversely affected by a reduction in the prices of most of its commodities. BHP currently carries a Zacks Rank #5 (Strong Sell). Other stocks worth a watch in the industry are Avalon Rare Metals Inc. (AVL) and North American Palladium Ltd. (PAL), each carrying a Zacks Rank #2 (Buy).

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