BHP knocks down 2017 copper guidance beyond, after Escondida mine strike

Today’s Important:

• Australia Consumer Price Index (CPI) QoQ fell to the actual 0.5% (while the expected forecast was 0.6%)
• Canada Core Retail Sales MoM rose to actual 1.7% (even if expected was 1.1%)
• United States Crude Oil inventories to actual – 1.034M (forecast: -1.470M)

Escondida Mine, Chile

Escondida mine strike lead to huge output reductions. The end of April will bring some changes…

Firstly, BHP Billiton cut its copper production guidance for the 2017 financial year again due to the 44-day long strike at the Escondida mine during the quarter ending March. Following a 2% reduction on its guidance in the December quarter.

The miner has now set its 2017 guidance for copper at 1.33-1.36 million tons, down from 1.62 million tons previously, it said on Wednesday April 26.
Secondly, BHP Billiton decreased its copper production  by 20% year-on-year to 939,000 tons in the quarter ending March.

The company’s share of mined copper at Escondida fell 23% year-on-year to 546,000 tons because of the strike.

Strike End

The strike finally ended on March 24. After Union N°1 decided to extend their current contract by 18 months under Article 369 of the Labour Code.

Following, BHP Billiton expects operations at Escondida will return to full capacity by the end of April.

As a result of the strike, Escondida lowered its guidance to 780,000-800,000 tons for 2017 financial year, compared with 1.07 million tons previously.

Also, the commissioning of the Escondida Water Supply project and the planned ramp-up of the Los Colorados Extension project are now expected in the September 2017 quarter.

Other copper mines

While Escondida Workers showed their dissatisfaction, it is not the only mine where the results got lower.

Observing Antamina’s copper production during the nine months ending March quarter, it fell 12% year-on-year to 95,000 tons.  While guidance for FY2017 was left unchanged at 130,000 tons.

Record mined materials was offset by lower grades and the shutdown of the concentrate pipeline due to the impact of adverse weather conditions, the company said.

Then, Pampa Norte copper output ending March quarter was down 2% year-on-year to 182,000 tons. And 2017 guidance was also unchanged and expected to be higher than the prior year.

Ending March quarter Olympic Dam copper production was down 29% to 115,000 tons. Because of the state-wide power outage during September and October 2016 and unplanned maintenance at the refinery during December 2016 and January 2017.

Guidance for the 2017 financial year remains unchanged at approximately 160,000-170,000 tons.

Lead and zinc 

BHP’s mined lead output in the March quarter was 1,308 tons, up 10% year-on-year. Nine-month output was 3,674 tons, up 20% on an annual basis.

BHP’s mined zinc output in the March quarter was 20,653 tons, up 73% from the previous year, while nine-month output was 58,426 tons, an increase of 19% year-on-year.

Molybdenum 

BHP’s mined molybdenum output for the March quarter came to 30 tons, down 87% year-on-year, while nine-month output was 48% higher on an annual basis to 816 tons.