BHP lowers Nickel West guidance

BHP has delivered record iron ore production for a March quarter but will cut guidance for Nickel West, blaming bad weather and off-specification product from supplier Mincor Resources.

Output from BHP’s Western Australian iron ore operations lifted 1 per cent on this time last year, taking it to a nine-month record of 188 million tonnes, the miner reported in a March quarterly update this morning.

Cost guidance from its WA iron ore operations remains unchanged but is likely to come in at the higher end of its target, with the division expecting to reach its full-year production target of between 246mt and 256mt for the end of FY23.

BHP is also on track to hit 80mt per annum at its newest mine, South Flank, by the end of the 2024 financial year.

There was no significant damage or reported injuries at BHP’s iron ore sites as a result of Tropical Cyclone Ilsa.

However, the company has been forced to cut guidance from its Nickel West operations from a previous range of between 80,000 tonnes and 90,000t, to between 75,000t and 85,000t.

BHP said this was due to issues with product supplied by Mincor Resources and bad weather.

“In March, BHP Nickel West advised one of its third party product providers, Mincor Resources, that it will no longer accept off-specification product containing high levels of arsenic due to the issues with processing this ore,” BHP reported.

“Further, a heavy rain event was experienced at the Mt Keith operations in early April 2023, impacting mine progression.”

Mincor - currently the subject of a takeover by Wyloo Metal - told the market in early April that it had delivered the lower quality ore, which is processed at BHP's Kambalda nickel concentrator, during the ramp-up stage of its flagship.

Mincor said it had initiated discussions with BHP to try and amend offtake terms but that BHP would not agree to it.

Production from Nickel West for the March quarter was 19,600t, a 5 per cent increase on output from this time last year, contributing to a year to date total for FY23 of 58,000t.

BHP shares were off 1.66 per cent at 11:09am AEST to trade at $45.30.