BHP iron ore on track after production slip

BHP has disclosed it will be paid up to $6.4 billion for its coal assets in Queensland, naming Whitehaven Coal as the preferred buyer shortly after posting quarterly production figures to market. 

A September update showed iron ore output for the quarter from BHP's operations in Western Australia had dropped by 3 per cent compared with the previous quarter, to 62 million tonnes. 

It comes as BHP works to get its newest mine, South Flank, up to full production capacity of 80mt a year. 

Nonetheless, the miner has maintained it would meet that target by the end of 2024, as well as full-year guidance of between 250mt and 260mt, despite the fall in output. 

An ongoing debottlenecking program at Port Hedland is also still expected to be completed next calendar year. 

Later in the day, BHP announced it would be divesting the Blackwater and Daunia coal mines in Queensland it owns with Mitsubishi Development for up to $US4.1 billion ($A6.4 billion). 

The sale of the two assets to ASX-listed Whitehaven Coal is expected to be completed in the June 2024 quarter. 

The cash payments will be split across a $US2.1 billion payment on completion and $US1.1 billion over the three years following. 

There is scope for another payment of up to $US900 million via a price-linked earnout arrangement. 

Proceeds from the deal will go towards paying down BHP's net debt. 

President minerals Australia Geraldine Slattery said BHP would work closely with Whitehaven to achieve a smooth change of ownership. 

“This transaction has delivered a good outcome for the BHP Mitsubishi Alliance, our workforce and the communities around the Blackwater and Daunia operations," she said. 

BHP shares closed the day up 0.68 per cent to trade at $45.88.