COVID-19 has a negative impact on BHP's quarterly iron ore production

BHP Group announced on Wednesday that its quarterly iron ore production climbed due to improved performance from its Western Australian assets and an ongoing ramp-up at the South Flank project.

The increase in production happened despite an 18% fall in iron ore spot prices during the September quarter, due to China's "zero-COVID" policy, which impeded economic activity and iron ore demand by frequently shutting down multiple large cities.

Following a quarterly fall in iron ore exports, rival Rio Tinto (NYSE:RIO) cut its annual forecast for iron ore shipments.

During the September quarter, BHP's Western Australia projects had decreased COVID-19 impacts and outstanding supply chain performance, according to the company.

In recent quarters, mining businesses in Australia have suffered shortages of trained workers due to border restrictions and worker absenteeism resulting from COVID-19, which has had a negative effect on production.

The manpower shortage hindered production at its New South Wales coal facilities, which had already been impacted by flooding. New South Wales' energy coal production declined by 38% in the September quarter.

"We predict that global macroeconomic uncertainty will continue to affect supply chains, energy pricing, labor markets, and the availability of equipment and materials in the foreseeable future," said CEO Mike Henry.

The miner's iron ore output climbed by 2% to 72,1 million metric tons in the first quarter (mt). The organization met its annual output and expense projections.

BHP indicated that it intends to speed the production launch of its Jansen stage 1 potash project in Canada. The company expects to start production in 2026.