BHP flags $600m loss in production due to unplanned disruptions

22 January 2019 (Last Updated July 2nd, 2020 11:43)

Anglo-Australian miner BHP has revealed a $600m loss to its productivity in the half year ended 31 December 2018 due to a freight train derailment in Western Australia, an unplanned outage at acid plant in Olympic Dam operation of South Australia and fire at Spence copper mine in Chile.

BHP flags $600m loss in production due to unplanned disruptions
The Mount Whaleback mine at Newman, Western Australia. Credit: Calistemon

Anglo-Australian miner BHP has revealed a $600m loss to its productivity in the half year ended 31 December 2018 due to a freight train derailment in Western Australia, an unplanned outage at acid plant in Olympic Dam operation of South Australia and fire at Spence copper mine in Chile.

In an operational review for the half year ended 31 December 2018, BHP stated these disruptions affected volumes by 45,000t in South Australia, 25,000t in Chile and four million tonnes (Mt) in Western Australia, leading to ‘lower than expected volumes’.

Although the train derailment did not hurt anyone, it was a major setback for the company, as its Western Australia iron ore mining operations serve as an important income source.

Its iron ore production dropped 6% in the quarter to 57.83Mt. However, its half-year production was up 2% year on year to touch 119.2Mt.

It posted record production at the Jimblebar mine and touched complete production capacity at the Mt Whaleback mine, which was impacted by a fire in June 2017.

The mining major informed its shareholders that it was on track to achieve its annual production forecasts across all its important commodities even though it experienced  a series of production disruptions in the last six months.

“BHP informed its shareholders that it was on track to achieve its annual production forecasts across all its important commodities.”

Production guidance was the same for petroleum, iron ore, metallurgical coal and energy coal. The mining company, however, increased its copper production forecast for 2019 to between  1.6Mt and 1.7Mt due to its decision not to offload Cerro Colorado copper mine in Chile to a private equity house EMR Capital.

The company’s full-year productivity guidance is under review due to the unplanned disruptions.  It stated: “Revised guidance will be provided in the December 2018 half-year financial results.”