According to Mining News Pro - It seems that some of the biggest companies in the mining sector are having a good time during the recent days and they are in a record breaking situation.
BHP hits profit record and sees demand healing in China
BHP Group, the world’s biggest miner, posted its highest ever full-year profit on record commodity prices, and will push ahead with growth options on a stronger demand outlook in China.
The producer will study plans to expand its top-earning iron ore unit to 330 million tons of production a year, and is continuing to assess options to lift volumes in copper and nickel, Melbourne-based BHP said Tuesday in a statement. A giant new potash mine in Canada remains on track to begin out in 2026.
Chief Executive Officer Mike Henry said China’s emergence from the Covid-19 lockdowns would provide a “tailwind” to the global economy, in a counterpoint to jittery sentiment on China following a swath of surprisingly weak data.
“We think that over the next six-to-12 months, China, if anything, is going to provide some stability to global growth and will help offset some of the slowing that we see elsewhere,” Henry said. China typically accounts for more than 60% of BHP’s revenue.
Rival miners have cautioned over a weaker outlook and Rio Tinto Group last month reported a decline in first-half profits and halved its dividend. Gold giant Newmont Mining Corp. and copper producer First Quantum Minerals Ltd. have also warned investors in recent weeks on the impact of inflationary pressures.
Shares rise
BHP’s result was “better than expected”, Goldman Sachs Group Inc. analysts Paul Young and Hugo Nicolaci wrote in a note. But they warned stronger currencies and weaker commodity prices were key downside risks, particularly if China’s property sector does not recover in the next year.
Though BHP will face pressure from a slowdown in advanced economies, higher costs and tighter labor markets, there will be opportunities for low-cost miners as inflation also drives prices higher, the company said. Production costs across major assets rose 13% on Covid-related issues and higher prices of diesel and electricity.
The miner’s shares jumped as much as 5.5% in Sydney trading, the most since January 2021, and were 4.8% higher at A$40.79 as of 1:00 p.m. local time. Iron ore futures in Singapore rose 2.1% to $108.20 a ton.
China’s central bank on Monday cut interest rates as data showed the economy struggling on
multiple fronts, and BHP’s comment on prospects there came with some caveats.
Downside risks in China include the possibility of further lockdowns, slowing exports, and continued turbulence in the country’s real estate sector, BHP said. And it noted that the iron ore market — its biggest source of earnings — would likely remain in surplus through this fiscal year.
Electric metals
The producer is aiming to seize on any pressure on competitors to add metals tied to clean energy and electric vehicle supply chains, including copper and nickel. Copper miner OZ Minerals Ltd. — which rejected a BHP takeover approach — was a “nice to have, not a must have”, Henry told media on Tuesday.
BHP will continue to produce high quality metallurgical coal, Henry said, but plans for new coal mines in Queensland, Australia, are on hold after the state government increased royalty taxes. He also said green steel technology, including using hydrogen rather than metallurgical coal, was still “decades” away from becoming commercial.
Total underlying earnings were $23.8 billion in the year to June 30, beating an average analyst forecast of $21.6 billion, and the highest since the current company was created in a 2001 merger. The producer will pay a record final dividend of $3.25 a share.
Anglo coal spinoff weighs acquisitions after record profit
Thungela Resources Ltd, South Africa’s largest exporter of power-station coal, is searching for assets to buy after first-half profit surged on record-high fuel prices.
The Johannesburg coal producer shrugged off shipping disruptions to declare a hefty 60 rand per share dividend after posting record earnings in the six months through June. Chief Executive Officer July Ndlovu is now seeking more coal producing assets outside South Africa, where it’s being forced to curb exports due to limited rail capacity.
“We have looked at opportunities over the last nine months and we continue to look very carefully at some of those,” Ndlovu said in an interview. “There are some which we are studying and are quite excited about,” he said, declining to provide more details.
The coal spinoff from Anglo American Plc lowered its export guidance this year even as coal prices soared to records, because state-owned freight company Transnet SOC Ltd. is unable to move sufficient volumes by rail. South Africa’s railroad network is increasingly being hit by cable theft and a shortage of locomotives, forcing Thungela to cut production.
Transnet’s lines are critical for moving bulk commodities such as coal from South Africa’s vast coal fields in Mpumalanga to the east coast. With some routes hobbled, Thungela has started using trucks. The company cut its 2022 thermal-coal export forecast to between 13 million and 13.6 million tons, from an initial projection of 14 million to 15 million tons.
Thungela could have shipped more “if we had more rail capacity,” Ndlovu said. The coal producer may have suffered about 2.5 billion rand ($153 million) in lost business opportunities in the first half due to the rail constraints, according to Chief Financial Officer Deon Smith.
“Without doubt we would have made more money but as management our role is not to focus on what could have been, it’s to maximize what we’ve got,” Ndlovu said.
Thungela is stockpiling lower grade material and concentrating on shipping its highest quality coal due to the rail bottlenecks. Its also exploring exporting some coal via Mozambique’s Maputo to take advantage of the spike in demand from European utilities. Still, hauling coal by “rail remains the the most efficient, cost effective and most reliable way to get to port,” the CEO said.
Thungela shares jumped 2.5% by 11:15 a.m. in Johannesburg. The stock has more than tripled this year as demand for coal spikes amid Russia’s war in Ukraine.
China July aluminum output hits record high after power restrictions loosened
China’s primary aluminum production rose 5.6% to a record monthly high at 3.43 million tonnes in July from a year earlier, with smelters ramping up production as power restrictions were eased.
July’s output was up 1.2% from 3.39 million tonnes in the prior month, according to data released by the National Bureau of Statistics on Monday. The previous record was 3.42 million tonnes marked in May.
The world’s top metals producer and consumer has seen a gradual pick-up in smelter activity in recent months as well as new capacity added in some regions such as the Yunnan and Gansu provinces.
This compares with production cuts last year when Yunnan province and other southern regions limited power due to a severe drought and restrictions aimed at reducing pollution.
Rising supply and a pandemic-induced slide in demand has weighed on the price of aluminum, a metal widely used in the construction and auto sectors.
The most-traded August aluminum contract on the Shanghai Futures Exchange SAFc1 sank to 17,300 yuan ($2,559.51) a tonne on July 15, the lowest level since April 2021.
Outside of China, aluminum production, which is an energy-intensive process, has been curtailed amid a surge in electricity and energy prices, particularly in Europe.
For the first seven months of the year, China produced 22.95 million tonnes, up 1.1% from the same period last year, the data showed.
Production of 10 nonferrous metals – including copper, aluminum, lead, zinc and nickel – climbed 4.8% to 5.63 million tonnes in July from a year earlier.
Output in the first seven months for the year rose 1.4% to 38.30 million tonnes. The other non-ferrous metals are tin, antimony, mercury, magnesium and titanium.