The BHP Group Ltd (ASX: BHP) share price is under the spotlight after the ASX iron share released its quarterly update for the three months to 31 March 2023.
BHP produces a number of commodities including iron, copper, coal and nickel. The business typically hopes to produce more resources than the last quarter.
BHP’s Q2 quarterly update
Firstly, BHP sadly reported that a staff member, Jody Byrne, died in a rail accident at its Port Hedland operations in February.
For the March quarter, BHP revealed that its iron ore production was flat year on year at 59.8 million tonnes. However, that figure was down 11% compared to the December 2022 quarter. The company explained that it saw lower volumes because of the temporary shutdown of all operations after the tragic fatality and the planned tie-in activity of the Port Debottlenecking project.
BHP’s Western Australian Iron Ore (WAIO) operations has seen record production for the nine months to 31 March 2023.
The iron division usually has the biggest impact on the BHP share price.
Copper production was up 10% year on year to 405.9 kt, though down 4% quarter on quarter. BHP explained there was lower concentrate volume at Escondida, reflecting the impact of different ore feed sources on throughput and recovery performance, and lower volumes at Olympic Dam as a result of reduced refinery productivity after the tie-in of minor upgrade works.
Metallurgical coal (used for steel) production was down 13% year on year to 6.9 mt, but it was the same as the December quarter.
Energy coal production was down 4% year on year to 3.9 mt, but up 38% quarter on quarter.
Nickel production was up 5% year on year to 19.6 kt and up quarter on quarter.
Copper guidance
The company’s overall copper guidance for FY23 was unchanged at between 1,635 kt to 1,825 kt. But guidance was lowered for Escondida, while the guidance for copper projects Pampa Norte and Olympic Dam is expected to be at the upper end of their predicted ranges.
Growth planned
BHP said that it’s pursuing growth options in copper and nickel globally. It aims to have up to 10 drill rigs on the ground at Oak Dam in South Australia in the next few months and have seen “promising results from a potential new copper prospect in Arizona.” This could help the BHP share price in the future.
In Canada, it has signed C$260 million of new contracts with Indigenous suppliers in March, and construction of the Jansen potash project is on track.
There’s a positive outlook for commodities. The BHP CEO Mike Henry said:
Recent engagements with customers in China and India have reaffirmed our positive outlook for commodity demand, with China’s economic rebound and solid momentum in India’s steelmaking growth helping to offset the impact of slowing growth in the US, Japan and Europe.
I think BHP is doing the right things to diversify and grow its business in the future. But, if I were looking to outperform the market over time, I would wait for a cheaper entry price for BHP shares.
