BHP, the world’s biggest miner, today released its full year production numbers which show an overall output rise of 9%.
The rise in production is influenced by a global fall in commodity prices. The idea is to dig out more ore at a cheaper price. This means cutting costs and selling more.
Here’s the average realised prices for BHP’s output:
All the commodities are in the red, except for nickel which is flat.
Iron ore posted the biggest fall over 12 months, down 41%. However the realised price is shown as $US61. Today’s price is $US52.10 a tonne.
Iron ore production increased by 13% to a record 254 million tonnes in the 12 months to the end of June.
BHP in 2016 will have a cost of $US16 to dig up one tonne of iron ore. The profit margins are there. All BHP has to do is dig more.
The plan for 2016 is to increase iron ore production by 7%.