The world’s biggest mining company BHP Billiton said extensive flooding in Australia will hamper its coking coal mining operations in Queensland for the next six months as it reported a 24 percent decline in coking coal production while iron ore production rose by 4 percent to touch record levels in the quarter ended in December 2010.
In a statement issued by the Melbourne based company, it said ore production was recorded at 33.7 million metric tons in the three months till December, compared to 32.5 million metric tons recorded over the same period, last month.
“Robust growth in developing economies remains the primary driver of commodity demand”, said the statement. Iron ore was the biggest component of revenues and the company plans to double production of iron by 2013.
Chris Weston – an institutional dealer at IG Markets Ltd. in Melbourne said “The bulk of their earnings comes from iron ore and the result looks good and beat expectations. Analysts were expecting to see those sorts of numbers”.
Coking coal production was badly hit by rains and output was down by 12 percent in the last quarter over 2009. “When combined with disruption to external infrastructure, we expect an ongoing impact on production, sales and unit costs for the remainder of the 2011 financial year”, the statement added.
The Queensland Resources Council estimates that floods may have cost the coal industry A$2.3 billion in lost sales. However, Copper production grew by 11 percent to 302,300 metric tons along with energy coal – which rose by 7 percent to 16.5 million tons.
The company remains positive about demand in 2011 and “Further positive signs are emerging in the United States following the Federal Reserve’s ongoing efforts to stimulate the economy”, the statement said.
“When coupled with supply-side constraint, which has been further exacerbated by weather-related disruptions in countries such as Australia, Colombia and South Africa, BHP Billiton remains confident in the fundamentals for its core products” it added.