Petroleum delivered its third consecutive annual production record following the successful delivery of a series of growth projects in the Gulf of Mexico (USA) and Australia. These contributed to continued growth in the high margin crude operations.
BHP Billiton operated Shenzi (USA) and Pyrenees (Australia) performed at or above design capacity during the year.
Western Australia Iron Ore achieved its tenth consecutive annual production record. Samarco (Brazil) also achieved quarterly and annual production records.
Annual production records were also achieved at North West Shelf, Hunter Valley Energy Coal, Worsley, Nickel West and Poitrel (all Australia), Alumar refinery (Brazil) and Zamzama (Pakistan).
Quarterly production records were achieved for manganese alloy, Cerrejon Coal (Colombia) and Samancor Metalloys (South Africa).
During the second half of the financial year, the old benchmark pricing system for iron ore and metallurgical coal was substantially replaced by shorter term market based pricing.
The transformation ensures the majority of BHP Billiton’s bulk commodities (iron ore, manganese, metallurgical coal and energy coal) are now linked to market based prices. BHP Billiton continues to be cautious on the short term outlook for the global economy. Uncertainty surrounds the near term prospects for growth in the developed world as governments adjust fiscal policies following a period of significant stimulus and subsequent increase in sovereign debt levels. Within China, measures introduced to reduce growth to more sustainable levels means volatility in commodity end-demand is likely to persist.
BHP Billiton sees these measures as a normal continuation of China’s economic management policies. Petroleum Total Petroleum Production – Petroleum delivered its third consecutive annual production record following the successful delivery of a series of growth projects in the Gulf of Mexico and Australia. BHP Billiton operated Shenzi and Pyrenees performed at or above design capacity during the year. This strong performance was partially offset by natural field decline and the suspension of drilling activities in the Gulf of Mexico. Drilling activities at Atlantis (USA) and Shenzi ceased during the June 2010 quarter.
BHP Billiton continues to monitor and assess the impact of the six month suspension of certain permitting and drilling activities in the Gulf of Mexico. Crude Oil, Condensate, and Natural Gas Liquids – High margin crude oil and condensate production was 27 per cent higher than the year ended June 2009 and significantly higher than all comparative periods following the successful start-up of Pyrenees and consistently strong performance at Shenzi. Strong reservoir performance from Atlantis North (USA) and a lack of weather related impacts also contributed to the annual increase in production. Natural Gas – Production was in line with the year ended June 2009. Production at the North West Shelf benefited from a full year contribution from LNG Train 5.
This was offset by planned maintenance at both the North West Shelf and UK assets. Aluminium Alumina – Production was nine per cent higher than the year and quarter ended June 2009 due to record annual performance at Worsley and the ongoing ramp up of the recently expanded Alumar refinery. An unplanned interruption of the ship unloading capabilities at Alumar impacted current quarter performance. In addition, Worsley benefited from the processing of stockpiled hydrate in the March 2010 quarter. Aluminium – Production across all operations was in line with comparative periods. Base Metals Copper – Production was higher than the March 2010 quarter due to strong performance at Escondida (Chile), a return to full capacity at Spence (Chile) and improved plant utilisation at Cerro Colorado (Chile).
Olympic Dam (Australia) recommenced hoisting from the Clark Shaft during the quarter and has returned to full production. Production for the year ended June 2010 decreased due to the Olympic Dam Clark Shaft outage, industrial action at Spence, lower grades at Cerro Colorado and Antamina (Peru), and the cessation of sulphide mining at Pinto Valley (USA). This was partly offset by higher grade and recovery at Escondida. Escondida production is expected to decline by five to 10 per cent in the 2011 financial year, mainly due to lower grade. At 30 June 2010 the Group had 236,584 tonnes of outstanding copper sales that were revalued at a weighted average price of US$2.96 per pound. The final price of these sales will be determined in the 2011 financial year.
In addition, 234,871 tonnes of copper sales from the 2009 financial year were subject to a finalisation adjustment in 2010. The finalisation adjustment and provisional pricing impact as at 30 June 2010 will increase earnings(b) by US$303 million for the year (year ended June 2009 US$936 million loss). Lead – Cannington (Australia) production increased over the previous year and quarter ended June 2009 due to higher grades and plant throughput. Zinc – Production was higher than the year and quarter ended June 2009 due to higher plant throughput and utilisation, and higher grades at Antamina and Cannington. Silver – Production was higher than the year and quarter ended June 2009 due to higher throughput and increased grade at Cannington. Uranium – Production was lower than the year and quarter ended June 2009 due to the Clark Shaft outage at Olympic Dam. The Clark Shaft returned to full capacity during the June 2010 quarter. Diamonds & Specialty Products Diamonds – Production was lower than all comparative periods primarily due to lower average grade.
During the year a higher proportion of ore was sourced from the Fox pit at Ekati (Canada) as mining of the higher grade Panda underground was completed. Stainless Steel Materials Nickel – Nickel West achieved record production for the year ended June 2010 following the major furnace rebuild at the Nickel West Kalgoorlie (Australia) smelter in the prior year. The subsequent drawdown of accumulated concentrate stocks is largely complete. Production in the June 2010 quarter was impacted by disruptions to hydrogen supply at the Nickel West Kwinana (Australia) refinery and an unplanned outage at Nickel West Kalgoorlie. During the second half of the 2011 financial year, Cerro Matoso (Colombia) production will be impacted for nine months due to the planned replacement of one of its two furnaces. Iron Ore Iron Ore – Record production was achieved for the year ended June 2010. Current quarter production was impacted by tie-in activities at Western Australia Iron Ore as Rapid Growth Project 4 continues to ramp up. Following demand related production adjustments, Samarco returned to full production during the year ended June 2010, delivering a record result for the operation. For the 2010 financial year, 39 per cent of Western Australia Iron Ore shipments on a wet metric tonne basis were priced on annually agreed terms, with the remainder sold on a shorter term basis.
During the second half of the financial year, the old benchmark pricing system was substantially replaced by shorter term market based, landed pricing. Our expectation is that future Western Australia Iron Ore shipments will be priced on this basis. Manganese Manganese Ore – Production was higher than all corresponding periods despite weather related impacts in Australia and South Africa during the June 2010 quarter. Mamatwan mine (South Africa) achieved record production during the quarter.
For the year, production was significantly higher and reflected improved market demand. Samancor Manganese ore continues to be priced on a monthly basis. Manganese Alloy – Following the recovery in market conditions, production was at record levels for the quarter and higher for the year ended June 2010. Samancor Metalloys achieved record production during the June 2010 quarter. Samancor Manganese alloy continues to be priced on a shorter term basis. Metallurgical Coal Metallurgical Coal – Production was higher due to improved operational and supply chain performance, supported by strong demand. The March 2010 quarter was impacted by wet weather disruptions at Queensland Coal and planned longwall moves at Illawarra (both Australia).
Despite this, Queensland Coal achieved record annual and quarterly shipments. Hay Point Coal Terminal (Australia) is currently undergoing planned maintenance on Berth 2, which is scheduled for completion in August 2010. As with iron ore, the old benchmark system was substantially replaced by shorter term market based pricing. For the year ended June 2010, 34 per cent of metallurgical coal shipments were priced on a shorter term basis.
The majority of product sold in the June 2010 quarter was priced in this manner. Energy Coal Energy Coal – Production was in line with the previous year with the continued ramp up of the Klipspruit (South Africa) expansion and record production at Hunter Valley Energy Coal offsetting lower customer demand at New Mexico Coal (USA). Cerrejon Coal achieved a production record during the June 2010 quarter however this was offset by weather related disruptions and a strike by the rail services provider in South Africa, and plant upgrade activities related to the MAC20 project at Hunter Valley Energy Coal.
(a) Excluding Suriname which was sold effective 31 July 2009.
(b) Earnings before interest and tax.
(c) Excluding Yabulu which was sold effective 31 July 2009. Throughout this report, unless otherwise stated, production volumes refer to BHP Billiton share and exclude suspended and sold operations.
Further information on BHP Billiton can be found on our Internet site: www.bhpbilliton.com. Australia Amanda Buckley, Media Relations Tel: +61 3 9609 2209 Mobile: +61 419 801 349 email: Amanda.Buckley@bhpbilliton.com United Kingdom & South Africa Andre Liebenberg, Investor Relations Tel: +44 20 7802 4131 Mobile: +44 7920 236 974 email: Andre.Liebenberg@bhpbilliton.com Fiona Martin, Media Relations Tel: +61 3 9609 2211 Mobile: +61 427 777 908 email: Fiona.Martin2@bhpbilliton.com Illtud Harri, Media Relations Tel: +44 20 7802 4195 Mobile: +44 7920 237 246 email: Illtud.Harri@bhpbilliton.com Leng Lau, Investor Relations Tel: +61 3 9609 4202 Mobile: +61 403 533 706 email: Leng.Y.Lau@bhpbilliton.com Americas Scott Espenshade, Investor Relations Tel: +1 713 599 6431 Mobile: +1 713 208 8565 email: Scott.Espenshade@bhpbilliton.com Brendan Harris, Investor Relations Tel: +61 3 9609 4323 Mobile: +61 437 134 814 email: Brendan.Harris@bhpbilliton.com Ruban Yogarajah, Media Relations Tel: US +1 713 966 2907 or UK +44 20 7802 4033 Mobile: UK +44 7827 082 022 email: Ruban.Yogarajah@bhpbilliton.com BHP Billiton Limited ABN 49 004 028 077 Registered in Australia Registered Office: 180 Lonsdale Street Melbourne Victoria 3000 Australia Tel +61 1300 55 4757 Fax +61 3 9609 3015 BHP Billiton Plc Registration number 3196209 Registered in England and Wales Registered Office: Neathouse Place London SW1V 1BH United Kingdom Tel +44 20 7802 4000 Fax +44 20 7802 4111 Members of the BHP Billiton group which is headquartered in Australia