BHP Billiton will maintain its 247 million tonne 2016 production guidance after lifting iron ore production at its Pilbara mines by 2 percent for the September quarter.
In the three months to September 30, BHP produced 61.315 million tonnes of ore out of its Western Australian mining interests, up 7 percent on the corresponding quarter in the previous year, with sales closely matching production.
"BHP Billiton remains on track to meet full-year production and cost guidance after a solid operational performance this quarter," said BHP chief Andrew Mackenzie in the report's release on Wednesday.
Global heavyweight, ranked third in production globally, has been steadily increasing production along with rivals Rio Tinto and Brazil's Vale amid a glut in global iron ore oversupply, forcing out higher cost producers.
Iron ore prices have fallen from a high of nearly 200 U.S. dollars per tonne in 2011 to forecasts of below 50 U.S. dollars within two years, forcing out higher cost producers. On Wednesday the spot price of iron ore for immediate delivery at Tianjin was 52.10 U.S. dollars per tonne.
In fear of further price deterioration, it is believed the global heavyweights have been on a drive to lower production costs to between 10 to 15 U.S. dollars per tonne, illustrated by Rio's move to automate its supply chain starting with the wide scale implementation of driverless trucks, moving unmanned trains and robot drills in the coming years.
BHP Billiton and Australian middleweight Fortescue Metals are trialling similar technology. In Petroleum, BHP's total production is up two percent on the June quarter, though down four percent for the September quarter compared to the corresponding period in 2014. The company expects to maintain full year guidance despite decreased capital investment starting to impact its U.S. shale output.
"In Petroleum, we continue to reduce costs in both our Onshore U.S. and Conventional businesses and will meet our production targets with 200 million U.S. dollars less capital investment," Mackenzie said.
BHP will continue to improve drilling efficiency, focus on high-value projects in the Gulf of Mexico and Australia, including life extension projects at its Bass Strait and the North West Shelf petroleum interests while deferring development of new fields in the U.S to preserve value, the report reads. At 1137 local time (AEDT) BHP Billiton was trading 0.96 percent higher to 24.22 Australian dollars (17.61 U.S. dollars) on the Australian market.
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