Low Grade Ore Hurts BHP Billiton’s Diamond Production in 2010

An 18% drop in Ekati's (above) production in the past quarter

BHP Billiton produced 3.05 million carats of diamonds in the fiscal year ended June 30, the company disclosed in a production report published Wednesday. In the last quarter, production totaled 740,000 carats, an 18 percent year-over-year decline. The annual production declined 5 percent.

The miner said production was lower than all comparative periods primarily due to lower average grade. During the year a higher proportion of ore was sourced from the Fox pit at Ekati as mining of the higher grade Panda underground was completed.

The production figures represent BHP Billiton’s 80 percent share of the Ekati diamond mine in Canada. Ekati’s total production was therefore 3.81 million carats for the year and 925,000 carats in the last quarter.

Ekati’s yield in the past year stood at 0.62 carats per tonne and 0.6 CPT in the June ending quarter.

In its outlook, BHP Billiton said it continues to be cautious on the short term for the global economy. “Uncertainty surrounds the near term prospects for growth in the developed world as governments adjust fiscal policies following a period of significant stimulus and subsequent increase in sovereign debt levels.”

The miner added that measures introduced to reduce growth to more sustainable levels in China means volatility in commodity end-demand is likely to persist. “BHP Billiton sees these measures as a normal continuation of China’s economic management policies.”