July 20, 2022: -On Tuesday, BHP Group entered rival Rio Tinto in cautioning that a tight labor market, supply-chain snags, and inflationary pressures would continue through 2023 and reported a fourth-quarter iron ore output that skipped estimates.
Global miners have struggled to overcome Covid-19-related labor shortages and zooming production costs. Iron ore costs come off their 2021 highs on advancing recession hazards and a cooling market in top consumer China.
Last week, Rio was accused of a tight labor market and rising inflation while reporting misses across the board in its second-quarter production update, which dragged its claims by nearly 3%.
On Tuesday, BHP, the globe’s biggest miner by market value, said iron ore output from Western Australia was 71.7 million tons in the three months to June 30, decreasing short of a consensus estimate of 76 million and the 72.8 million it registered a year ago.
“Over the year ahead, the continuing conflict in Ukraine, the unfolding energy crisis in Europe, and policy tightening are predicted to result in a general slowing of global growth,” BHP Chief Executive Officer Mike Henry said.
Henry added that China hopes to contribute positively to growth as stimulus guidelines take effect.
The miner lifted its output guidance for iron ore for the current year. The midpoint of BHP’s forecast for 2023 iron ore production for the region, between 278 million and 290 million tons, was higher than the 282.8 million quantities it produced this year.
BHP’s output encountered its projection of between 278 million and 288 million tons in a year that witnessed the company achieve a merger of its petroleum business with Woodside Energy Group and move away from polluting fossil fuels.
“In what was a fairly monumental year for BHP with the successful unification and Petroleum spin out, today’s result will take the shine off of this to an extent heading into its FY results,” RBC Capital Markets analysts Tyler Broda said.
“The share price reaction may be exacerbated by BHP’s strong relative performance thus far in the sector downturn,” Broda added. BHP shares jumped 2.4% in early trading but declined to only 0.4% higher. That was in line with a 0.2% increase in the ASX 300 metals as iron ore prices in China struck $100 each after Asia’s biggest economy sought to ease problems in its trouble-ridden property sector.
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