Thursday 17th Oct, 2019

Pilbara iron ore production hit by cyclones

Iron ore stockpiles at Port Hedland. Photo: BHP Billiton
Iron ore stockpiles at Port Hedland. Photo: BHP Billiton

BHP and Rio Tinto have cut iron ore production guidance for the 2019 financial year due the impacts of Tropical Cyclone Veronica.

BHP’s new production forecast reflects a six to eight million tonnes drop to 265-270 million tonnes. Its facilities did not sustain major damage as a result of the cyclone, but its port ramp up was slowed by localised flooding, the processing of wet material and equipment assessment, according to the company.

The weather impact also pushed up BHP’s iron ore unit costs to below US$15 ($21) per tonne from previous guidance of less than $US14 ($20) per tonne.

“During the March 2019 quarter, we had a strong operational performance despite weather impacts across Australia and Chile,” chief executive Andrew Mackenzie said.

“We approved Atlantis phase three and now have five major projects under development. Those projects, our work on transformation, technology and culture, and our successful petroleum and copper exploration and appraisal programs will grow value and returns for years to come.”

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Rio Tinto’s 2019 guidance for Pilbara shipments has been revised to 333-343 million tonnes, down from 338-350 million tonnes.

The company reported a 14 per cent reduction in its Pilbara iron ore shipments of 69.1 million tonnes during the March quarter this year compared to the same period last year.

The drop reflects a slower ramp up and ongoing disruption to shipments caused by weather in March and a fire at Cape Lambert A in January this year. These are expected to affect production through to the second quarter of 2019.

“Our iron ore business faced several challenges at the start of this year, particularly from tropical cyclones,” Rio Tinto chief executive JS Jacques said.

“The quarterly operational performance in our other products was solid, generally higher than last year. Our focus remains on safety, delivering our ‘value over volume’ strategy and allocating capital with discipline.”

Rio’s recovery work was further hindered by Tropical Cyclone Wallace, nearly 300 kilometres off Western Australia’s north-west coast earlier in April, according to the company.

Its Pilbara unit cost guidance in 2019, however remains at $US13-14 ($18-19) per tonne.