BHP in pledge to ore buy­ers

Kalgoorlie Miner - - BUSINESS - Stu­art McK­in­non

BHP boss An­drew Macken­zie says it is too early to as­sess the fi­nan­cial im­pact of this week’s Pil­bara train de­rail­ment.

How­ever, the min­ing gi­ant in­sisted on Thurs­day it in­tended to meet all con­trac­tual com­mit­ments to its cus­tomers and would not have to re-work con­tracts as a re­sult.

“I know peo­ple will be lis­ten­ing to me and try­ing to fig­ure out what the im­pacts of all this will be,” Mr Macken­zie told share­hold­ers at the com­pany’s an­nual meet­ing in Ade­laide.

BHP’s cru­cial trans­port link be­tween its mines and the port was sev­ered on Mon­day morn­ing af­ter it had to de­rail a fully laden iron ore train about 120km south of Port Hed­land.

The train, made up of four lo­co­mo­tives and 268 cars, had ca­reered for 50 min­utes at an aver­age speed of 110km/h over 90km with no one at the con­trols af­ter the driver got out to check a car­riage and the train con­tin­ued on its jour­ney.

More than 130 work­ers with a fleet of heavy equip­ment are scram­bling to clear wreck­age from the crash site and re­pair 1.5km of dam­aged track.

BHP said it ex­pected to have par­tial rail op­er­a­tions back up within a week, but it has re­vealed its port stock­piles will run out be­fore rail ser­vices can be re­stored.

An in­dus­try source, who pre­vi­ously worked at a se­nior level con­nected to the Pil­bara iron ore in­dus­try, told The West Aus­tralian this week the cost of the in­ci­dent could run into the hun­dreds of mil­lions, based on the com­pany los­ing 800,000 tonnes worth about $80 mil- lion in rev­enue for ev­ery day its ship­ments were sus­pended.

The source said BHP could meet its long-term con­tract sales by sell­ing less ore into the spot mar­ket to cor­rect for any lost tonnes.

“Sales com­mit­ments are nor- mally three to four weeks ahead of the ac­tual prod­uct lift­ing so they can cor­rect their ship­ping ar­rivals over the next three weeks,” he said.

BHP has not yet up­dated its ful­lyear iron ore pro­duc­tion es­ti­mate of 273Mt-283Mt, but the source said he ex­pected the com­pany would have to re­duce guid­ance to 265Mt275Mt at some stage.

The com­pany is also ex­pected to in­cur de­mur­rage while ships have to wait off the coast of Port Hed­land for ore.

Pic­ture: AAPI­mage

An­drew Macken­zie speaks to the me­dia af­ter BHP’s an­nual meet­ing in Ade­laide on Thurs­day.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.