Miners digging in for the long haul

TWO of Australia’s leading resource companies say they’re capable of withstanding the turmoil and disruptions caused by the coronavirus crisis.

Fortescue Metals says it had planned for the strict border controls announced by the South Australian government on Sunday while Santos says it is confident in its business continuity and contingency plans.

Santos said that by delaying major projects and reducing capital expenditures by $550 million, or 38 per cent, it would be able to be cashflow break-even even if the price of oil stays at $US25 a barrel.

Santos said given the volatility it would likely delay a decision on whether to develop the Barossa gas field, 300km north of Darwin, a $4.7 billion project that would extend the Darwin LNG by more than 20 years.

Santos said its debt covenants have sufficient headroom and wouldn’t be under threat at current oil prices for several years.

Iron ore giant Fortescue said most of its workforce are based in Western Australia and wouldn’t be hit by the travel ban and self-quarantine provisions, which includes exemptions for mining industry workforces.

Fortescue said it would use a variety of measures, including charter flights from eastern Australia, to ensure that sitecritical functions aren’t impacted. Shipments from Port Hedland continue and mining and processing activity are in line with guidance, Fortescue said.

Oil Search meanwhile said that a state of emergency announced Sunday in Papua New Guinea, which includes a two-week ban on domestic flights, had been planned for.

Caltex Australia expects demand for jet fuel could drop by 80 to 90 per cent due to flight cancellations and travel bans.

The fuel refiner and petrol station owner also said it was closely monitoring Australian demand for gasoline and diesel given the coronavirus situation.

ASX-listed but Texas-based Freedom Oil and Gas, a fracking company, said it had entered voluntary administration.