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BHP cuts iron ore guidance

Business

BHP Billiton has cut its iron ore production target for the second time this year, on account of lower expected output at its operations in Western Australia.

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The resources giant now expects to produce 229 million tonnes in full year 2016, down from 237 million tonnes.

That figure had already been reduced by 10 million tonnes from an earlier target given following the suspension of operations at its Samarco joint venture mine in Brazil after a fatal dam collapse there.

The company today also posted a 10 per cent fall in iron ore production from its March 2015 quarter to 53 million tonnes, due to the shutdown at Samarco since November.

“Over the last 12 months, we have taken a number of steps to strengthen BHP Billiton, including asset sales and deferral of investment,” chief executive Andrew Mackenzie said in a statement on Wednesday.

“While these measures will reduce our output this year, they have increased our focus on our highest quality operations and will support stronger margins and returns.”

The change in iron ore FY2016 guidance is due to an expected cut in production at its Pilbara operations by 10 million tonnes to 260 million tonnes because of bad weather and rail maintenance work.

Production guidance for its petroleum, copper and coal businesses remains unchanged.

BHP in February posted a $US5.67 billion ($A7.25 billion) half-year loss amid a collapse in commodity prices that prompted it to slash shareholder dividends and sharply write down the value of its US shale assets.

Today, the company said its petroleum production during the March quarter was down three per cent to 59.4 million barrels of oil equivalent (mmboe), compared to a year ago, reflecting lower drilling activity in its US shale business and natural field decline in its conventional assets.

It reaffirmed the production target of 237 mmboe for this financial year and said it now plans to spend a higher-than-previously estimated $US640 million on an exploration program for testing of future growth opportunities.

Copper production in the March quarter fell 12 per cent to 405,000 tonnes but the company expects to maintain its annual target of 1.5 million tonnes, helped by a jump at the Olympic Dam operations in South Australia.

AAP

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