BHP Billiton was on track to meet its iron ore production guidance for fiscal 2017 after reporting a strong second quarter for its most profitable business on Wednesday.
The world’s biggest miner reported a 9 percent rise in iron ore output in Western Australia to 70 million tonnes for the December quarter from the same period a year earlier.
It maintained full-year guidance of between 265 million and 275 million tonnes.
“We have performed well during a period of higher prices, with record iron ore volumes achieved at WAIO (Western Australia Iron Ore),” BHP Billiton Chief Executive Andrew Mackenzie said in the group’s quarterly operations review.
Forecasters anticipated a strong quarter for the world no. 3 iron ore miner after figures from the Port Hedland export terminal near its mines reported record shipments of 43.9 million tonnes in December.
Close peer Rio Tinto ended up shipping 327.6 million tonnes in calendar 2016, meeting its own full-year guidance.
Later this month, the so-called “third force” in Australian iron ore mining, Fortescue Metals Group, is forecast to report it too is on track to meet full-year production guidance.
Iron ore was one of the best-performing commodities in 2016, rising 81 percent on a spot basis, and is expected to fuel strong growth in BHP’s cash flow.
Over the first half of fiscal 2017, BHP said it sold its iron ore for an average price of $55 a tonne compared with $44 in the year-ago period.
But concern among forecasters is rising that millions of tonnes of additional low cost supply from Australia and Brazil will soon send iron ore prices into retreat.
A Reuters poll in mid-December put the average price of iron ore at $54.70 per tonne in 2017, while Barclays expects prices to tumble as low as $50 a tonne by the third quarter of 2017.
Copper output fell 7 percent to 357,000 tonnes in the December quarter, partly due to power outages at its Olympic Dam mine in South Australia, which forced BHP to cut full-year guidance by 2 percent to 1.62 million tonnes.
Olympic Dam copper production for half-year to Dec. 31 decreased by 30 percent to 78,000 tonnes, BHP said.