BHP keeps the faith on China as iron ore sales slip in first quarter

Daniel NewellThe West Australian
Camera IconDespite the ructions with China, BHP on Tuesday said it was leaving full-year guidance unchanged at between 258 million tonnes and 269mt. Credit: STRINGER/Imaginechina via AFP

BHP has given nothing away about its ongoing tiff with China while reporting a marginal slip in iron ore production for the first quarter.

The Big Australian is still locked in negotiations over a rumoured ban on the sale of the company’s Pilbara iron ore into the Middle Kingdom.

Reports emerged earlier this month that the China Mineral Resources Group had asked domestic traders to temporarily stop purchasing all WA cargoes from BHP amid a pricing dispute.

CMRG — established three years ago to buy ore on behalf of its steelmakers in a bid to keep a lid on prices — supposedly wants a discount on the spot cargoes it purchases from BHP and to have a larger chunk of those sales be settled in Chinese yuan instead of the US dollar.

Despite the ructions, BHP on Tuesday said it was leaving full-year guidance unchanged at between 258 million tonnes and 269mt.

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Production for the three months to the end of September dropped one per cent to 64mt amid “a quarter of significant planned maintenance”, including a rebuild of a dumper at Port Hedland, which impacted 4.3mt.

The average realised price of $US84.04/t was up 5 per cent compared to the same time last year.

One of only two times “China” appeared in the quarterly update came with commentary about sales, which BHP said were broadly in line with the previous year, with a 5 per cent increase in sales of its higher-value lump product.

“We sell and ship iron ore products via different commercial distribution channels, this includes seaborne sales, and portside sales in China which have increased over recent years in line with our strategy,” the miner said.

“We will continue to optimise distribution channels to support product placement.”

The other was chief executive Mike Henry’s forecast for global growth, saying he believed overall macro-economic signals for commodity demand remain resilient.

“Global growth forecasts are moving higher. While we expect some deceleration in growth in H2 CY25, in China we still expect GDP growth of about 5 per cent for the year,” Mr Henry said.

BHP Australia president Geraldine Slattery told a Leadership Matters breakfast hosted by The West Australian last week that her company’s relationship with its Chinese customers remained “strong” and the reportedly tense negotiations were a “normal” annual event.

“They happen every year, and yes, there’s decent speculation in the press and often conflicting speculation, but I think the takeaway is we’ve got strong relationships with customers in China.”

Total copper production for the three-month period jumped 4 per cent to 494,000t thanks to record concentrator throughput at Escondida in Chili. Production at Olympic Dam and Prominent Hill in South Australia was flat at 72,600t.

BHP has left total copper output for the year unchanged at between 1.8mt and 2mt.

Coal production was up 8 per cent to 4.9mt.

The miner last month blamed Queensland’s high taxes on coal sales for its decision to axe 750 jobs across the State.

It said weak prices for metallurgical coal and the unsustainable impact of the Queensland Government’s coal royalties were responsible for its decision to slash jobs, as it complained of taxes as high as 67 cents in every dollar earned.

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