BHPB H1 metallurgical coal production update

Friday, 18 Feb 2011

BHP Billiton underlying EBIT was USD 1,453 million, an increase of USD 681 million or 88% from the corresponding period. The significant improvement in EBIT margin was largely attributable to higher realized prices.

Hard coking coal, weak coking coal and thermal coal prices increased by 50%, 57% and 43% respectively.

In total, higher prices increased Underlying EBIT by USD 1,147 million, after allowing for the royalty related increase in price linked costs.

Queensland Coal (Australia) production was significantly affected by the persistent rain and flooding that impacted the Bowen Basin in the December 2010 half year. The effect on Queensland Coal sales was minimized by the healthy level of inventory that was held across our supply chain at the commencement of the December 2010 half year. However, weather related disruption and higher labour and contractor rates contributed to an increase in costs for the period. Furthermore, the combined impact of a weaker US dollar and inflation reduced Underlying EBIT by USD 291 million.

BHP Billiton continues to assess the impact of the extreme weather events and confirms that force majeure has been declared for the majority of our Bowen Basin products, including Goonyella Riverside, Peak Downs, Norwich Park, Gregory Crinum, South Walker, Blackwater and Saraji.

The decision to double pumping capacity following severe wet weather in the March 2008 quarter has minimized in-pit water accumulation, although heavy rainfall that persisted for much of the December 2010 half year has significantly restricted overburden removal. When combined with disruptions to external infrastructure, we expect an ongoing impact on production, sales and unit costs for the remainder of the 2011 financial year.

Sims Metal blames US slump for slow recovery

By Greg Roberts,
Feb19,2011 12:00AM

THE world's largest scrap metal recycler, Sims Metal Management, says it is struggling with a sluggish economic recovery in North America and scarcity of scrap despite an increase in overall first half profit.

The company increased first half net profit 23.6 per cent to $49.3 million on

16.6 per cent higher revenues to $3.9 billion and expects a strong ferrous (iron) market-led recovery. Sims shares gained 39c, or 2.06 per cent, to close at $19.34 yesterday.

In North America, earnings before interest and tax (EBIT) fell 5 per cent to $26.6 million, compared to a 57 per cent jump in Australasia to $19.3 million and 67 per cent lift in Europe to $36.4 million.

Clawing back just one million of a lost three million tonnes of scrap metal would "conservatively" improve North American EBIT by $30 million, chief financial officer Rob Larry said.

Scrap intake in North America in the period was 5.1 million tonnes, an increase of 1 per cent on the previous year.

However, that figure was 23 per cent below pre-global financial crisis scrap metal volumes in North America pressuring margins, the Australian company said.

Chief executive Daniel Dienst said he was "disappointed" with margin pressures in North America.

Sims Metal declared an interim dividend of 12c a share, 42 per cent franked 50 per cent of net profit. ((sourced from Herald Sun)