BHP’s Escondida mine records output drop in FY22

Australian mining giant BHP said that lower ore grades, supply chain disruptions and a reduced workforce due to Covid-19 impacted its FY22 copper production in Chile. 

The Escondida mine, the world's largest producer of copper concentrates and cathodes, saw its production drop 6% to 1Mt due to higher-than-expected concentrator feed grade decline and the pandemic-related workforce problems. 

BHP’s fiscal year runs from July 2021 to June 2022.

In Q4, Escondida recorded an output increase of 17% to 289,300t as the quarter saw “record material mined and near record concentrator throughput,” the company said in a release. 

BHP sees production increasing to between 1.08Mt and 1.18Mt in 2023 and the medium-term guidance of an average of 1.20Mt/y over the next five years remained unchanged.

Escondida is owned and operated by BHP (57.5%) in a joint venture with Rio Tinto (30%) and Japan-based JECO Corp (12.5%). The mine is located in the Atacama desert in northern Chile, 170km southeast from the city of Antofagasta.

Pampa Norte

Pampa Norte, which consists of the Spence and Cerro Colorado copper mines, saw FY22 production rise 29% to 281,200t.

The increase was due to the ramp up of the Spence Growth Option (SGO), partially offset by the impact of lower cathode production given a 14% decline in stacking feed grade, BHP said. 

In Q4, output was up 11% to 77,200t.

Production for next year is expected to be between 240,000t and 290,000t. “This reflects a forecast decline in stacking feed grade at Pampa Norte, the commencement of plant design modifications at SGO and the continued transition towards the planned closure of Cerro Colorado at the end of the 2023 calendar year,” said the company.

Pampa Norte is wholly owned by BHP.

Spence is located 162km northeast of Antofagasta and Cerro Colorado 120km east of Iquique, also in the north. 

Groupwide output

BHP’s FY22 production decreased 4% to 1.57Mt, which includes the Olympic Dam mine in Australia and Antamina in Peru. 

The company expects 2023 output to come in at between 1.64Mt and 1.83Mt.

“We expect the lag effect of inflationary pressures to continue through the 2023 financial year, along with labor market tightness and supply chain constraints,” said CEO Mike Henry in comments on the company’s outlook. “Over the next year, China is expected to contribute positively to growth as stimulus policies take effect, however, the continuing conflict in Ukraine, the unfolding energy crisis in Europe, and policy tightening globally is expected to result in an overall slowing of global growth.”