The supply-side response by the mining and resources industry to continued strong global demand for raw materials remains constrained by a shortage of people, equipment and supplies, BHP Billiton says.
These constraints have led to tight labour markets and difficulty in sourcing construction and drilling plant and machinery, which in turn has led to rising input costs, the group said in its December-quarter exploration report on Tuesday.
Currency strength against the dollar is adding further pressure.
“These conditions, which are currently particularly acute in Australia and the Gulf of Mexico, continue to challenge the ability of BHP Billiton to deliver development projects to budget,” BHP Billiton said.
“Despite these pressures, all projects currently remain on or ahead of schedule, with the Atlantis South schedule under review following the recent hurricanes in the Gulf of Mexico,” the group added.
BHP Billiton has a 44% stake in the $1,1-billion Atlantis South development.
The recent hurricanes in the Gulf of Mexico affected the availability of equipment required to allow for completion on schedule in the third quarter of 2006.
“As a result, the project schedule remains under review,” BHP Billiton said.
During the December quarter, BHP Billiton’s board approved the Rapid Growth Project 3 expansion at Western Australia Iron Ore, the Third Pellet Plant expansion at Samarco in Brazil, the Stybarrow and NWS Angel Petroleum developments, both in Australia, and the Alumar Refinery expansion in Brazil.
Record output
BHP Billiton has reported record half-year production of aluminium, copper, nickel and liquefied natural gas, with production supported by strong market conditions.
Releasing its latest production report on Tuesday, BHP Billiton said production of copper was up 24% in the half-year ended December, while nickel output for the period was 137% higher following the acquisition of Australian mining group WMC Resources in June 2005.
The Escondida copper mine in Chile achieved a third consecutive quarterly copper production record. BHP Billiton has a 57,5% stake in Escondida.
The group’s Western Australian Iron Ore reported increased production during the December quarter, after weather and derailment interruptions in the September quarter.
Total petroleum production for the December 2005 half-year increased by 3% compared with the half-year ended December 2004 to 59,31-million barrels of oil equivalent.
The increase was due to higher production from Minerva in Australia, Angostura in Trinidad and Tobago, Mad Dog in the United States — which were all commissioned in January 2005 — and ROD in Algeria, which was commissioned in October 2004.
However, these increases were offset by natural field decline at Bass Strait in Australia and Liverpool Bay in the United Kingdom, the sale of BHP Billiton’s interests in Laminaria in Australia in January 2005, and hurricane-related disruptions in the Gulf of Mexico.
Alumina output for the half-year of 2,040-million tonnes was unchanged from the previous six-month period.
Record aluminium production was achieved for the half-year ended December of 678 000 tonnes, unchanged from the previous half-year.
Mozal in Mozambique and Hillside in South Africa continued to deliver strong production, both achieving quarterly and half-yearly records, BHP Billiton said.
Copper output for the December 2005 half-year was a record 637 300 tonnes, 24% higher than the December 2004 half-year, due to improved performance at Escondida and inclusion of a full six months of production from Olympic Dam in Australia.
Silver production increased by 5% to 25,228-million ounces from the previous comparative half-year.
Lead output increased by 4% to 142 060 tonnes and uranium oxide concentrate in the December quarter was 2% lower than the September quarter at 2 158 tonnes.
BHP Billiton’s iron-ore output for the half-year rose by 2% to 48,211-million tonnes.
Metallurgical coal output for the half-year declined by 5% from the previous half-year to 17,959-million tonnes.
Manganese ore production declined by 3% to 2,665-million tonnes for the half-year, while manganese alloys output for the half year declined by 24% to 304 000 tonnes due to lower market demand, BHP Billiton said.
Diamond production decreased by 21% to 1,466-million carats in the half-year, primarily reflecting the processing of lower-grade ore at Ekati in Canada, BHP Billiton added.
Fertiliser production in the December quarter increased by 3% to 252 600 tonnes from the September quarter.
Energy coal output for the half-year was 45,297-million tonnes, 1% higher than the December 2004 half-year.
Nickel production for the half-year was a record 93 100 tonnes, up by 137% from the previous comparative six-month period. — I-Net Bridge