Posted on 21 Feb 2024
BHP is focused on increasing iron ore production to greater than 305 million tonnes/year over the medium term, Kallanish notes.
The miner says it is also studying options for growing the Western Australia Iron Ore (WAIO) business up to 330m t/y. It expects to complete these studies in 2025.
Options under consideration include developing new mines, expanding and leveraging existing infrastructure, including at Yandi and Port Hedland, increasing ore beneficiation and building a new hub.
Meanwhile, WAIO production guidance for the 2024 fiscal year remains unchanged at 282-294mt.
The firm's underlying Ebitda for its iron ore business rose 27% year-on-year to $9.6 billion in the first half ended 31 December 2023. This was underpinned by higher average realised prices for iron ore and lower diesel prices.
"Over the next two years we expect a small further improvement in global steel production with growth led by India, Southeast Asia and to a lesser extent China. We expect that reduced drag from developed regions will also help," the miner says.
In 2024, it expects modest growth in steel production, in line with its long-held view that China’s steel production would sit at a plateau in the 1-1.1 billion t/y range in the first half of the 2020s.
It also expects another year of strong growth for India as construction demand remains robust. Medium term, it notes the Indian government is targeting 300m t/y of steelmaking capacity by 2030.
The firm expects a broadly balanced market overall in 2024, but with both supply and demand growth expected to slow somewhat from prior-year rates. It foresees low-cost supply not growing at a rate sufficient to displace the high-cost production which is required to keep the market balanced.
Its estimate of real-time cost support sits in the $80-100/tonne range on a 62% Fe cfr basis, unchanged from its previous reporting period.
"How effectively China’s stimulus policy is implemented, especially with regards to real estate, and how the government chooses to regulate steel production, are both swing factors in 2024," BHP notes.
In the medium term, it expects China’s demand for iron ore to be lower than it is today, as it moves beyond its crude steel production plateau and the scrap-to-steel ratio rises. Demand for its product from elsewhere in developing Asia will offset this to a degree.
Source:Kallanish
