BHP Billiton delivered a solid performance in the first quarter of the 2009 financial year. This was achieved within a challenging supply environment characterised by unexpected disruptions,including the hurricanes in the Gulf of Mexico.
Consistent with the outlook statement given at our interim and preliminary results, China has not been immune to the global slowdown. Macroeconomic indicators show that Chinese growth has softened during the quarter, albeit from very high levels. We expect volatility and uncertainty to continue in the short term. Notwithstanding this short term uncertainty, we remain confident that the ongoing industrialisation and urbanisation of China and other developing economies will continue to drive strong longer term demand for our products.
Our uniquely diversified portfolio of low cost and high quality assets places us at a competitive advantage in the current uncertain environment and we are well positioned to capitalise as markets recover. Our strong cash flow and balance sheet allows us to re-invest throughout the cycle, in our growth projects that are focused on lower risk brownfield expansions in high margin commodities.
Quarterly production records delivered at Hunter Valley Coal, Mining Area C, Saraji (all Australia), Samarco (Brazil), Samancor Manganese (South Africa), Cerrejon Coal
(Colombia) and Zamzama (Pakistan) operations.
Record quarterly shipments for iron ore to meet customer demand.
Samarco Third Pellet Plant (Brazil) successfully ramped up to full design capacity.
Olympic Dam (Australia) achieved a quarterly record for ore hoisted and material mined.
Petroleum production was 15 per cent higher than the September 2007 quarter due to newly commissioned projects and strong operational performance. This was achieved despite the impact of two hurricanes in the Gulf of Mexico (USA).
Kalgoorlie Nickel Smelter (Australia) rebuild was successfully completed ahead of
schedule.
Total Petroleum Products – Production was 15 per cent higher than the September 2007 quarter driven by the ramp up of new projects delivered in the 2008 financial year. In addition two new projects commenced during the quarter, Neptune (USA) and North West Shelf Train 5 (Australia), contributing additional volumes. Two million barrels of oil equivalent was delayed due to the impact of two hurricanes in the Gulf of Mexico.
As announced by the operator, the Mad Dog (USA) drilling rig was lost as a result of Hurricane Ike. The facility was shut down for part of the September 2008 quarter. It is currently anticipated that production will resume in the next quarter. The operator and other owners are currently examining options to permanently address the rig loss at Mad Dog.
Crude Oil, Condensate, and Natural Gas Liquids – Production was 31 per cent higher than the September 2007 quarter due to significant growth in high margin crude production from new projects. This was achieved despite the impact of two hurricanes in the Gulf of Mexico.Production was slightly lower than the previous quarter, mainly due to the impact of hurricanes in the Gulf of Mexico and unplanned interruptions at Bruce (UK).
Natural Gas – Production was in line with the September 2007 quarterly production record and the prior quarter.
Alumina – Production decreased for the quarter mainly due to scheduled maintenance at Alumar (Brazil) and Worsley (Australia). Stockpiled hydrate from the calciner outages at Alumar and Worsley is expected to be processed next quarter.
Aluminium – The Southern African smelters continued to operate at reduced levels to comply with the mandatory reduction in power consumption. The September 2008 quarter included the complete shutdown of the B and C potlines at Bayside (South Africa).
Copper – Production was in line with the September 2007 quarter driven by the continued ramp up of Spence and Escondida Sulphide Leach (both Chile) and improved reliability, head grade and recovery at Olympic Dam; this was offset by lower production at Escondida. In line with expectations, production was lower than the June 2008 quarter. Escondida’s production was impacted by declining ore grade and poor reliability in the electrical motor of the Laguna Seca SAG mill. Escondida has reduced throughput to minimise potential of further stoppages. However, this will result in reduced copper concentrate production until a permanent solution is implemented within an estimated nine month period.
The impact to total copper production at Escondida is estimated to be around 10 per cent in the 2009 financial year. This is in addition to the impact of grade decline announced in the June 2008 quarter.
Lead – Production was lower than the September 2007 quarter due to lower head grades at Cannington (Australia) and Antamina (Peru). Production was higher than the June 2008 quarter due to increased mill throughput.
Zinc – Production was higher than the September 2007 quarter mainly due to improved grade at Antamina.
Silver – Production decreased versus the September 2007 quarter due to lower grades at Cannington and Antamina. Lower production at Escondida was in line with lower concentrate production. This was partially offset by improved mining performance at Olympic Dam.
Production increased versus the June 2008 quarter primarily due to increased mill throughput at Cannington and improved mining performance at Olympic Dam.
Uranium – Production increased versus all comparative quarters due to an improvement in uranium recovery at Olympic Dam. Olympic Dam also achieved a record for ore hoisted and material mined.
Diamonds – Production decreased compared to the June 2008 and September 2007 quarters mainly due to lower grades and a change in ore source. As Ekati (Canada) transitions from open pit mining to underground mining the mix of ore processed will change from time to time. During the quarter Ekati processed a higher proportion of higher value carats from Koala underground as production continues to ramp up.
Nickel – In line with expectations, production for the quarter was affected by a major furnace rebuild at the Kalgoorlie Nickel Smelter. The Kwinana Nickel Refinery (Australia) was shut down for the same duration for maintenance activities. The furnace rebuild was successfully completed ahead of schedule. Production at the smelter is now back at full capacity and the refinery is expected to be at full capacity by the end of October 2008. In addition, Yabulu (Australia) was impacted by planned maintenance. This was partially offset by the continued ramp up of Ravensthorpe and the Yabulu Extension Project (both Australia).
Iron Ore – Record shipments were achieved for the quarter ended September 2008. Production was 15 per cent higher than the September 2007 quarter due to the successful execution of a series of growth projects in Western Australia.
In addition, Samarco (Brazil) set a quarterly production record as the operations benefited from the successful ramp up of the third pellet plant. Production at Western Australian Iron Ore for the September 2008 quarter was impacted by the temporary suspension of operations following safety incidents.
Manganese Ore – Production was higher than the September 2007 quarter due to improved mine performance at GEMCO (Australia) and Hotazel (South Africa) and increased availability of rail and port capacity in South Africa.
Production for the quarter was in line with the June 2008 quarter. The South African operations achieved a fourth consecutive quarterly record. GEMCO production was impacted by maintenance and tie-in activities for its expansion project.
Manganese Alloy – Production for the quarter was higher than both comparative quarters despite the impact of the mandatory 10 per cent reduction in power consumption and load shedding in South Africa.
Metallurgical Coal – Production continued to recover strongly from the wet weather events earlier in the year with record production for the quarter achieved at Saraji. Mines are now operating at full capacity whilst continuing to manage water and mud removal. Queensland Coal (Australia) had record shipments for the quarter.
Illawarra Coal’s (Australia) production decreased for the quarter mainly due to extended longwall change outs.
Energy Coal – Quarterly production records were achieved at Cerrejon Coal and Hunter Valley Coal. Production at New Mexico Coal (USA) was higher than the September 2007 quarter due to increased operational efficiencies at Navajo (USA). Moreover, the comparative quarter was impacted by poor geological conditions at San Juan (USA). Production was in line with the quarter ended June 2008.
Throughout this report, unless otherwise stated, production volumes refer to BHP Billiton share and exclude suspended and sold operations. This report together with the Exploration and Development Report represent the Interim Management Statement for the purposes of the UK Listing Authority’s Disclosure and Transparency Rules. There have been no significant changes in the financial position of the Group in the quarter ended 30 September 2008.
Consistent with the outlook statement given at our interim and preliminary results, China has not been immune to the global slowdown. Macroeconomic indicators show that Chinese growth has softened during the quarter, albeit from very high levels. We expect volatility and uncertainty to continue in the short term. Notwithstanding this short term uncertainty, we remain confident that the ongoing industrialisation and urbanisation of China and other developing economies will continue to drive strong longer term demand for our products.
Our uniquely diversified portfolio of low cost and high quality assets places us at a competitive advantage in the current uncertain environment and we are well positioned to capitalise as markets recover. Our strong cash flow and balance sheet allows us to re-invest throughout the cycle, in our growth projects that are focused on lower risk brownfield expansions in high margin commodities.
Quarterly production records delivered at Hunter Valley Coal, Mining Area C, Saraji (all Australia), Samarco (Brazil), Samancor Manganese (South Africa), Cerrejon Coal
(Colombia) and Zamzama (Pakistan) operations.
Record quarterly shipments for iron ore to meet customer demand.
Samarco Third Pellet Plant (Brazil) successfully ramped up to full design capacity.
Olympic Dam (Australia) achieved a quarterly record for ore hoisted and material mined.
Petroleum production was 15 per cent higher than the September 2007 quarter due to newly commissioned projects and strong operational performance. This was achieved despite the impact of two hurricanes in the Gulf of Mexico (USA).
Kalgoorlie Nickel Smelter (Australia) rebuild was successfully completed ahead of
schedule.
Total Petroleum Products – Production was 15 per cent higher than the September 2007 quarter driven by the ramp up of new projects delivered in the 2008 financial year. In addition two new projects commenced during the quarter, Neptune (USA) and North West Shelf Train 5 (Australia), contributing additional volumes. Two million barrels of oil equivalent was delayed due to the impact of two hurricanes in the Gulf of Mexico.
As announced by the operator, the Mad Dog (USA) drilling rig was lost as a result of Hurricane Ike. The facility was shut down for part of the September 2008 quarter. It is currently anticipated that production will resume in the next quarter. The operator and other owners are currently examining options to permanently address the rig loss at Mad Dog.
Crude Oil, Condensate, and Natural Gas Liquids – Production was 31 per cent higher than the September 2007 quarter due to significant growth in high margin crude production from new projects. This was achieved despite the impact of two hurricanes in the Gulf of Mexico.Production was slightly lower than the previous quarter, mainly due to the impact of hurricanes in the Gulf of Mexico and unplanned interruptions at Bruce (UK).
Natural Gas – Production was in line with the September 2007 quarterly production record and the prior quarter.
Alumina – Production decreased for the quarter mainly due to scheduled maintenance at Alumar (Brazil) and Worsley (Australia). Stockpiled hydrate from the calciner outages at Alumar and Worsley is expected to be processed next quarter.
Aluminium – The Southern African smelters continued to operate at reduced levels to comply with the mandatory reduction in power consumption. The September 2008 quarter included the complete shutdown of the B and C potlines at Bayside (South Africa).
Copper – Production was in line with the September 2007 quarter driven by the continued ramp up of Spence and Escondida Sulphide Leach (both Chile) and improved reliability, head grade and recovery at Olympic Dam; this was offset by lower production at Escondida. In line with expectations, production was lower than the June 2008 quarter. Escondida’s production was impacted by declining ore grade and poor reliability in the electrical motor of the Laguna Seca SAG mill. Escondida has reduced throughput to minimise potential of further stoppages. However, this will result in reduced copper concentrate production until a permanent solution is implemented within an estimated nine month period.
The impact to total copper production at Escondida is estimated to be around 10 per cent in the 2009 financial year. This is in addition to the impact of grade decline announced in the June 2008 quarter.
Lead – Production was lower than the September 2007 quarter due to lower head grades at Cannington (Australia) and Antamina (Peru). Production was higher than the June 2008 quarter due to increased mill throughput.
Zinc – Production was higher than the September 2007 quarter mainly due to improved grade at Antamina.
Silver – Production decreased versus the September 2007 quarter due to lower grades at Cannington and Antamina. Lower production at Escondida was in line with lower concentrate production. This was partially offset by improved mining performance at Olympic Dam.
Production increased versus the June 2008 quarter primarily due to increased mill throughput at Cannington and improved mining performance at Olympic Dam.
Uranium – Production increased versus all comparative quarters due to an improvement in uranium recovery at Olympic Dam. Olympic Dam also achieved a record for ore hoisted and material mined.
Diamonds – Production decreased compared to the June 2008 and September 2007 quarters mainly due to lower grades and a change in ore source. As Ekati (Canada) transitions from open pit mining to underground mining the mix of ore processed will change from time to time. During the quarter Ekati processed a higher proportion of higher value carats from Koala underground as production continues to ramp up.
Nickel – In line with expectations, production for the quarter was affected by a major furnace rebuild at the Kalgoorlie Nickel Smelter. The Kwinana Nickel Refinery (Australia) was shut down for the same duration for maintenance activities. The furnace rebuild was successfully completed ahead of schedule. Production at the smelter is now back at full capacity and the refinery is expected to be at full capacity by the end of October 2008. In addition, Yabulu (Australia) was impacted by planned maintenance. This was partially offset by the continued ramp up of Ravensthorpe and the Yabulu Extension Project (both Australia).
Iron Ore – Record shipments were achieved for the quarter ended September 2008. Production was 15 per cent higher than the September 2007 quarter due to the successful execution of a series of growth projects in Western Australia.
In addition, Samarco (Brazil) set a quarterly production record as the operations benefited from the successful ramp up of the third pellet plant. Production at Western Australian Iron Ore for the September 2008 quarter was impacted by the temporary suspension of operations following safety incidents.
Manganese Ore – Production was higher than the September 2007 quarter due to improved mine performance at GEMCO (Australia) and Hotazel (South Africa) and increased availability of rail and port capacity in South Africa.
Production for the quarter was in line with the June 2008 quarter. The South African operations achieved a fourth consecutive quarterly record. GEMCO production was impacted by maintenance and tie-in activities for its expansion project.
Manganese Alloy – Production for the quarter was higher than both comparative quarters despite the impact of the mandatory 10 per cent reduction in power consumption and load shedding in South Africa.
Metallurgical Coal – Production continued to recover strongly from the wet weather events earlier in the year with record production for the quarter achieved at Saraji. Mines are now operating at full capacity whilst continuing to manage water and mud removal. Queensland Coal (Australia) had record shipments for the quarter.
Illawarra Coal’s (Australia) production decreased for the quarter mainly due to extended longwall change outs.
Energy Coal – Quarterly production records were achieved at Cerrejon Coal and Hunter Valley Coal. Production at New Mexico Coal (USA) was higher than the September 2007 quarter due to increased operational efficiencies at Navajo (USA). Moreover, the comparative quarter was impacted by poor geological conditions at San Juan (USA). Production was in line with the quarter ended June 2008.
Throughout this report, unless otherwise stated, production volumes refer to BHP Billiton share and exclude suspended and sold operations. This report together with the Exploration and Development Report represent the Interim Management Statement for the purposes of the UK Listing Authority’s Disclosure and Transparency Rules. There have been no significant changes in the financial position of the Group in the quarter ended 30 September 2008.
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