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Olympic Dam copper surge adds to big year for BHP

Business

Increased copper production at Olympic Dam has helped mining giant BHP boost its global production for the 2020 financial year.

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In figures reported to the Australian Securities Exchange this morning, the Olympic Dam operation produced 172 kilotons of copper at its South Australia mine for the year, a seven per cent increase on the 2019 financial year.

The company said the production increase was supported by solid underground mine performance with strong development metres achieved and record grades.

It is predicting a further copper production increase in the 2021 financial ahead of a dip in 2022 when a major smelter maintenance campaign is planned.

Chile continues to be the driving force behind BHP’s copper global production, which grew by two per cent to 1724kt.

BHP’s total iron ore production reached a record 248 megatons for the year on the back of record production in Western Australia.

The company also reported it had completed the third phase of a drilling exploration program at Oak Dam in South Australia, 65km southeast of Olympic Dam.

The total area drilled at Oak Dam is now about 21,500 m with the third phase results currently being analysed. This follows encouraging results from the previous drilling phases, which confirmed high-grade mineralised intercepts of copper, with associated gold, uranium and silver.

BHP CEO Mike Henry said the company was able to achieve record production in a number of its operations while delivering an improved cost base.

“This performance, achieved in the face of COVID-19 and other challenges, is a result of the outstanding effort of our people and the support of our communities, governments, customers and suppliers,” he said.

“Our diversified portfolio and high-quality assets, together with our strong balance sheet, make us resilient to the ongoing uncertainty in the markets for our commodities.

“We expect to continue to generate solid cash flow through the cycle and we remain confident in the outlook for demand for our products over the medium to long-term.

“We have learned new ways of working, both internally and with others, through the COVID-19 pandemic. We will seek to embed these in a way that

helps to reinforce these priorities.”

BHP shares were up slightly to $38.46 this morning following the announcement.

Meanwhile, Santos will book non-cash impairments of up to $US800 million ($A1.1 billion), joining a number of global energy majors forced to write down assets after a coronavirus-induced slump in oil prices.

The oil and gas producer expects to record non-cash charges of between $US700 million ($A997 million) and $US800 million ($A1.1 billion)in its 2020 interim results.

Most of the impairment charges relate to Santos’ Gladstone Liquefied Natural Gas (LNG) project in its Cooper basin fields in Queensland, owing to a more than 10 per cent reduction in the company’s long-term oil price assumption.

Energy companies have been forced to write down assets or delay funding after crude prices collapsed this year owing to a breakdown in talks between Russia and Saudi Arabia and demand destruction caused by coronavirus-led restrictions.

Woodside Petroleum last week warned of a $US4.37 billion hit to its first-half results, following global oil majors BP and Royal Dutch Shell’s announcements of huge impairments on their assets.

 – with AAP

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