BHP Group is considering increasing its iron ore production in Western Australia due to expectations of global demand growth and a focus on decarbonization. The CEO of BHP, Mike Henry, revealed these plans at a conference. The company aims to raise its iron ore production to 300 million tonnes per annum (Mtpa) from its current output of 280-290 Mt. This increase will involve optimizing port and rail logistics and continuous productivity improvements. BHP believes that China and India will be the main drivers of global economic growth, with forecasts suggesting a 2.5-fold increase by 2050 compared to 2020 levels.
In the long term, BHP is studying the possibility of further expanding its iron ore production to 330 million tons per year, with a decision expected by 2025. However, this option will face competition from other projects in BHP's portfolio. In the first half of fiscal year 2022/2023, BHP achieved a 2% year-on-year increase in total iron ore production, reaching 132 Mt, primarily due to efficient supply chains and reduced weather-related disruptions. The company anticipates iron ore production of 249-260 million tons for the current financial year, with China serving as a stabilizing force in raw material demand in 2023.
Furthermore, Fitch Solutions, a member of the international credit rating agency Fitch, raised its price forecast for iron ore from $110/t to $125/t in April 2023. This upward revision reflects market optimism regarding the Chinese economy's recovery. Fitch also projects a 3.1% increase in iron ore supply by 2028, driven by new capacity in Australia, Brazil, and Africa.
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