SYDNEY (Reuters) - Global miner BHP Billiton (BHP.AX) upgraded its iron ore production target for fiscal 2014 while petroleum output hit a quarterly record, as it ramps up output to capture more of a slower-growing market for raw materials.
Iron ore benefited from multi-billion-dollar expansion work underway in Australia that will lift fiscal 2014 output to 212 million tonnes, up from a previous target of 207 million, BHP (BLT.L) said in its fiscal first-quarter production report.
In petroleum, liquids output rose 16 percent, helped by a shift in focus at its U.S. shale holdings to focus more on oil production as U.S. gas prices sag.
BHP has warned mining companies face slowing demand growth for raw materials from China and elsewhere requiring greater emphasis on economies of scale to keep costs down.
The world’s biggest mining company has already cut planned spending for 2013/14 by 25 percent to $16 billion, and has earmarked a further decline for the following year.
“The large, top-tier mining companies have learned lessons from the recent downturn,” said Peter Esho, an analyst with Invast Financial Services in Sydney. “Their efforts to cut costs and focus on ramping up volumes is so far progressing well, good enough to offset any weakness in commodity prices.”
BHP on Monday forfeited nine oil and gas exploration blocks in India, citing an inability to carry out exploration operations there.
At the same time, the miner signaled a willingness to spend heavily in businesses its deems most profitable.
In Australia, it said it had accelerated the first stage of development of its new Jimblebar mine by six months, which should add some 35 million tonnes more iron ore annually to start in about 18 months.
BHP also held out the possibility of expanding the lode to yield as much as 55 million tonnes a year.
BHP isn’t the only major broadening its footprint in the Australian iron ore belt.
Fortescue Metals Group (FMG.AX) is well on its way to raise production to 155 million tonnes after posting a 61 percent rise in September-quarter shipments.
Placing more emphasis on liquid shale deposits, BHP said it was prioritising onshore drilling in the liquids-rich Black Hawk section of the company’s Eagle Ford field in the United States.
Quarter-on-quarter, the Eagle Ford field showed a 29 percent increase in liquids production, BHP data showed.
The company also stuck with its full-year target for output of 250 million barrels of oil equivalent (boe), despite suggestions from some analysts there was a risk of underperformance because of weaker offshore Gulf of Mexico production.