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Storms, bushfires hit production at BHP

Multi-mineral mining company BHP saw a decline in production at some of its mines, which it has attributed to forces of nature including bushfires and tropical storms.

However, it added, production and unit cost guidance remained unchanged for the 2020 financial year.

According to the Melbourne-headquartered company's trading statement for the half year ended 31 December 2019 – released on Tuesday morning – the production of energy coal saw a 12% decline.

New South Wales Energy Coal saw an 11% drop in production due to a change in product strategy, BHP added.

"Smoke from regional bushfires and dust have reduced air quality at our operations, which has impacted December 2019 production. We are monitoring the situation and if air quality continues to deteriorate then operations could be constrained further in the second half of the year," said the statement.

Crude oil, condensate and natural gas liquids production declined by 9% in the Gulf of Mexico due to the impact of Tropical Storm Barry. The company further reported a 9% decline in the production of petroleum.

However, news was more positive for copper: the third phase of the drilling program at Oak Dam in South Australia is in progress and is expected to be completed in the June 2020 quarter, BHP said.

BPH’s share price went down by 1.98% during the course of Tuesday, and had reached R341.68 by 4pm. "Just judging by the share price reaction, [the] share price is not down as much as the market, but it is down roughly in line with the market [which is] down 1.2%. That would imply that in broad terms, the announcement is within expectation," said Jean Pierre Verster, the CEO of Protea Capital Management. 


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