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BHP Billiton: operational review

World Coal,

Mining giant, BHP Billiton, has released its operational review for the half year ending 31 December 2015. Here we look at the company’s analysis of its coal operations.

Metallurgical coal: Metallurgical coal production increased by 21% in the December 2014 half year to a record 26 million t. The company said its metallurgical coal operations continue to perform strongly and it has retained guidance of 47 million t for the 2015 financial year ahead of the wet season and planned longwall moves at the Crinum, Dendrobium and West Cliff underground mines.

Queensland coal delivered record production and sales volumes, primarily as a result of increased equipment utilisation and the successful ramp-up of the Caval Ridge mine. Record production at Goonyella, Daunia and Poitrel contributed to the strong result.

Illawarra coal achieved record production of 4.7 million t in the December 2014 half year, as maintenance efficiencies supported higher equipment utilisation rates. The 41% increase from the December 2013 half year also reflects an extended outage at Dendrobium in the previous period.

Thermal coal: Thermal coal production decreased 3% in the December 2014 half year to 36 million t.

Guidance for the 2015 financial year remains unchanged at 73 million t.

As anticipated, drought conditions constrained production volumes at Cerrejón given the need to manage dust emissions, while Navajo Coal production declined following lower customer demand arising from the closure of three of the five power units at the Four Corners Power Plant. New South Wales thermal coal production also declined as a result of processing lower yield material during the period and an additional planned wash-plant outage. At South Africa thermal coal, higher wash-plant utilisation contributed to a 10% increase from the

December 2013 half year, which was affected by industrial action.

BHP Billiton CEO, Andrew Mackenzie, said: “Our operational performance over the last six months has been strong. We are reducing costs and improving both operating and capital productivity across the Group faster than originally planned. These improvements will help mitigate some of the impact of lower commodity prices and we remain alert to opportunities to further increase free cash flow.”

“We continue to believe that our planned demerger will help support further improvements in operating performance in both the core BHP Billiton and South32 assets. Within BHP Billiton, it would allow us to identify and deploy best practice across our assets more quickly and simplify our organisation to reduce overheads. We are making good progress towards securing the approvals we require to put the proposal to a shareholder vote in May and remain on track to complete the process before the end of the financial year,” Mackenzie added. 

Written by Sam Dodson

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