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April 21, 2021, 12:54 a.m. EDT

BHP lifts copper guidance, iron-ore output falls

By Rhiannon Hoyle

SYDNEY--BHP Group Ltd. said it will likely produce more copper than expected this fiscal year but less coal, as it reported a 4% fall in third-quarter iron-ore output because of bad weather and maintenance.

The world's No. 1 miner by market value on Wednesday raised its annual production forecast for its copper division, despite quarterly output falling by 9% in the three months through March compared with a year earlier, to 391,400 metric tons.

BHP said the Escondida mine in Chile has been running better than anticipated even as it operates with a substantially slimmed-down workforce because of pandemic restrictions.

The miner raised its full-year copper guidance to 1.535 million-1.660 million tons. It had previously forecast annual output of 1.510 million-1.645 million tons.

Expectations of stronger output prompted BHP to lower its mining-cost estimate at Escondida for the fiscal year. It now expects unit costs of between $0.95 and $1.10 a pound versus an earlier forecast of $1.00-$1.25 a pound.

Grappling with weather-related disruptions in Australia, BHP said it produced 59.9 million metric tons of iron ore during the three-month period, down 4% year-on-year.

Still, iron-ore output was up 4% to 188.3 million tons for the first nine months of its fiscal year versus the same period a year earlier, helping the miner to benefit from a surge in the iron-ore price to an almost-decade high.

The company kept its annual iron-ore production forecast unchanged, at 245 million-255 million tons, although it said output is likely to be in the upper half of that range.

The miner downgraded its guidance for metallurgical coal output, to 39 million-41 million tons from 40 million-44 million previously, citing weather-related disruptions in Australia.

It consequently raised the unit-cost guidance for its Queensland Coal business to $74-$78 a ton, from an earlier estimate of $69-$75/ton.

BHP also cut its annual guidance for energy coal production to 18 million-20 million tons, from 21 million-23 million tons previously. That was related to weather disruptions, as well as lower than expected volumes at the Cerrejón mine in Colombia.

Chief Executive Mike Henry said major projects were progressing well, including the Ruby oil-and-gas project in Trinidad and Tobago, which was ahead of schedule and on budget.

"First production from Petroleum's Ruby project is expected in the coming weeks and South Flank, with its higher [iron ore] grade and lump proportion, is on track to begin production in the middle of the year," he said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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