BHP's coking coal production drops 13% in Q1CY'24 amid planned maintenance

BHP Mitsubishi Alliance's (BMA's) coking coal (100% basis) production for Q1CY'24 was recorded at 12.1 million tonnes (mnt), dropping by 13% as against 13.9 mnt recorded in Q1CY'23.

In response to the tragic loss of a team member in January 2024, BMA ceased operations for 24 hours to implement a safety stop across all mines, extending to 3.5 days at Saraji. Production has suffered due to increased planned maintenance, an extended longwall move at Broadmeadow, and heightened stripping efforts to stabilise the supply chain amid depleted inventory caused by weather impacts and labour constraints.

Efforts to replenish inventory will persist into CY'25. Despite improved production in Q1CY'24, higher-than-anticipated wet weather, including two tropical cyclones, and the temporary shutdown following the fatality at Saraji have impacted FY'24 (1 July 2023 to 30 June 2024) production estimates.

In contrast to the decline in coking coal production, BHP's thermal coal production in Q1CY'24 was recorded at 4.1 mnt, up by 5% as compared to Q1CY'23.

Continued strong operational performance led to increased production, aided by improved weather conditions boosting truck productivity.

In Q2CY'23, the implementation of the NSW government's Coal Market Price Emergency Notice prompted increased domestic sales, resulting in a reduction in washed coal and a notable increase in overall volumes. Meanwhile, efforts to extend mining consent until 30 June 2030, through a modification request to the NSW government, will continue into FY'25 (1 July 2024 to 30 June 2025).

This approval would enable New South Wales energy coal (NSWEC) to continue mining beyond its current consent, expiring in 2026, and implement a managed cessation process by the end of FY'30 (1 July 2029 to 30 June 2030).

Guidance for FY'24 (July 2023- June 2024)

FY'24 (1 July 2023 to 30 June 2024) metallurgical coal production is now projected to range between 21.5- 22.5 mnt (43 - 45 mnt on a 100% basis), down from the previous estimate of 23 - 25 mnt (46 - 50 mnt on a 100% basis). Energy coal production for FY'24 (1 July 2023 to 30 June 2024) is anticipated to align with the upper end of the guidance range, expected to fall between 13 - 15 mnt.