BHP $US600m productivity hit
BHP has revealed a derailment of a train carrying iron ore in November and several high profile outages has cost the miner about $US600 million.
In the company’s December quarterly report it said productivity had been impacted by the iron ore train derailment in the Pilbara, as well as lower than expected volumes at Olympic Dam brought on by an unplanned acid plant outage in August 2018; and a fire at the electro-winning plant at the Spence copper project in Chile in September.
The unplanned incidents resulted in a 4 million tonne loss in iron ore volumes, and a volume impact of 45,000t copper at Olympic Dam, and 25,000t copper at Spence.
Despite the result, BHP assured production guidance for FY19 remained unchanged for iron ore, and copper guidance had increased to between 1.6mt and 1.7mt with the retention of its Cerro Colorado asset.
However, in a separate matter the miner was hosing down claims it had underpaid iron ore royalties’ to the WA Government for more than a decade with the alleged total owing between $200 and 300 million, due to issues relating to the miner’s Singapore marketing hub.
In a statement BHP said the Mines Department had recently queried a “long-standing and historically accepted deduction for costs related to the sale of WA iron ore”.
“The long-standing deduction has been consistently audited and accepted by the Mines Department as part of BHP WA iron ore royalty calculations,” the company stated.
“It is concerning that previously audited and accepted payments to the government are now being revisited and BHP is working with the Mines Department to resolve this matter.”
BHP was also facing widespread criticism of the decision to scrap a historic domestic shipping contract, which would leave about 80 Australian shipping workers from two iron ore vessels without a job.
“BHP’s decision destroys one of the oldest national domestic shipping supply chains in Australia and seafarers aboard the MV Mariloula and MV Lowlands Brilliance have been discarded, left high and dry,” International Transport Workers’ Federation (ITF) Seafarers’ Section chair Dave Heindel said.