BHP suspends iron ore operations after worker death
06-SEP-2008 Intellasia | Bloomberg
Sep 6, 2008 - 7:00:00 AM
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BHP Billiton Ltd, the world's largest mining company, suspended its West Australian iron ore operations following a second death in two weeks, halting output from mines that supply about 14% of annual global trade.
"All our iron ore operations in Western Australia are suspended except for essential services,'' Samantha Evans, a Melbourne-based spokeswoman for BHP, said today by phone. Mining stopped last night and it's too early to say whether BHP will declare force majeure, allowing it to miss deliveries, Evans said.
Iron ore supply from Australia, the world's biggest exporter, has already been disrupted this week after Rio Tinto Group declared force majeure following damage to a loader at its Cape Lambert port. Cash prices, which rose to a record this year because of surging demand from China's steelmakers, are about double annual contract prices.
"We might see some mills who are in need of supply seeking some spot market deliveries to replace the contract ore,'' Gerard Burg, energy and minerals economist with National Australia Bank Ltd, said today by phone from Melbourne. "It's a market that still remains quite tight.''
BHP dropped as much as 2.2% to A$36.30 and traded at A$36.66 at 11:07 a.m. in Sydney on the Australian stock exchange. The company produced 111 million metric tonnes of iron ore in fiscal 2008. Rio Tinto dropped 2.2% to A$109.17.
Police Investigation
Police are investigating the death that involved an employee of HWE Mining, the Leighton Holdings Ltd unit that BHP employs to operate the Yandi mine, BHP said in a statement on its Web site dated yesterday. No further details of the accident were provided. A worker also died at the same mine last week, resulting in the temporary suspension of operations.
BHP, seeking to buy Rio Tinto in a US$122 billion hostile takeover, controls seven iron ore mines in Western Australia's Pilbara region. Yandi, about 100 kilometres (62 miles) northwest of the town of Newman, is 85% owned by BHP, eight% owned by Itochu Corp and 7% owned by Mitsui & Co.
Rio Tinto declared force majeure following damage to a rail-car dumper at Cape Lambert port on August 31, Nick Cobban, a spokesman for London-based Rio said September 3. The damage led to a partial suspension of iron ore ship loading, Cobban said.
Cape Lambert is one of two ports Rio Tinto uses to transport ore from the Pilbara to its customers in Asia. Australia may export about 326 million tonnes of iron ore this year, according to Citigroup Inc. forecast in an April 7 report. Total global exports are estimated at 797 million tonnes, it said.
Force majeure is a legal clause that allows a company to miss deliveries because of circumstances beyond its control.
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