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BHP Cuts Output Guidance As Rio Delays Key Lithium Mine

Low infection rates have allowed BHP as well as rivals Rio Tinto and Fortescue Metals Group to keep running mines at maximum output


The Mount Arthur thermal coal mine in Muswellbrook, New South Wales. Photo: BHP

 

BHP on Wednesday warned that its flagship Australian iron ore business faced headwinds due to next month’s proposed easing of border restrictions imposed to curb the coronavirus pandemic.

The warning came in a quarterly production report in which the miner cut guidance for its coking coal division, due to worker absenteeism caused by the Omicron variant.

“The proposed easing of Western Australia’s border restrictions … may introduce some short-term disruption to the operating environment as the Covid-19 pandemic evolves in the state,” BHP said.

Western Australia has maintained a hard line on border controls throughout the pandemic.

Low infection rates have allowed BHP, Rio Tinto and Fortescue Metals Group to keep running their mines at maximum output. However, it has also led to problems flying in skilled workers from eastern states because of travel restrictions.

 

Strong Finish to 2021

BHP’s iron ore business finished strongly in 2021, shipping at an annualised rate of 295m tonnes in the three months to December 31.

However, copper production is trending towards the low end of the guidance range, reflecting lower production at the Pampa Norte operations in Chile.

Metallurgical coal guidance has been reduced as a result of “significant wet weather impacts and Covid-19 related labour constraints,” it added.

BHP plans to this year divest its lower grade coal operations, such as through the Cerrejón sale to Glencore and an exit from BHP Mitsui Coal.

Later this week, BHP shareholders will vote on plans to collapse its dual-listed corporate structure in London and Australia and move its main stock market listing to Sydney. The proposal is likely to be approved, according to analysts.

Timeline Pushed Back

BHP’s review follows that of Rio Tinto, its Anglo-Australian rival, released on Tuesday.

Rio Tinto has pushed back the timeline for production from its new lithium mine in Serbia until 2027 because of slow progress in obtaining licences.

The miner said it had been forced to revise the development timelines for the Jadar mine because of delays securing a prerequisite to publish the environmental impact assessment.

“We fully understand the concerns among some Serbian stakeholders about environmental impacts and we will continue to engage to demonstrate the project has developed mitigation solutions,” the company said.

Rio also said it was rebuilding relations with traditional landowners in Western Australia following the company’s destruction of a 46,000-year-old sacred Aboriginal heritage site in 2020.

 

  • George Russell

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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