BHP estimates production loss of up to 8mln tonnes of iron ore in aftermath of cyclone

BHP has estimated an initial production reduction of 6-8 million tonnes of iron ore on a full-capacity basis due to damage caused by a cyclone that hit Western Australia last month.

Isolated flooding at BHP’s Western Australia Iron Ore (WAIO) site and along sections of the rail line leading into Port Hedland has limited train transportation and other operations at the port, the miner said on Tuesday April 2.

“BHP port and rail operations in Port Hedland, Western Australia, are ramping up after being suspended due to Tropical Cyclone Veronica,” the company said, although operations are “not expected to return to full capacity until later this month.”

The miner said it has been in contact with customers and intends to meet contractual commitments.

The WAIO site produced 66 million tonnes of iron ore on a full-capacity basis in the fourth quarter of 2018.

BHP is not the only miner to face supply disruptions.

Australian miner Rio Tinto flagged a potential output loss of 14 million tonnes on Monday April 1 due to disruptions caused by Cyclone Veronica.

And Brazilian miner Vale anticipates that up to 92.8 million tonnes of its production will be affected by various mining suspensions that followed a deadly breach at one of its tailings dams in January. Vale has said it is expecting to ship 307 million-332 million tonnes of iron ore this year, down 50 million-75 million tonnes from its earlier target.

Iron ore futures on China’s Dalian Commodity Exchange surged during morning trading on Tuesday April 2 due to the supply disruptions. The most-traded May iron ore contract ended the morning trading session at 656.50 yuan per tonne, up 1.16% from its opening price of 649 yuan per tonne.

Seaborne iron ore prices were also up on Monday, with the Fastmarkets MB 62% Fe Iron Ore Index gaining $1.88 per tonne to $88.69 per tonne cfr China.

The Fastmarkets MB 65% Fe Iron Ore Index stood at $101 per tonne on Monday, up $1.70 per tonne from the previous day, while the Fastmarkets MB 58% Fe Iron Ore Premium Index increased by $1.72 per tonne to $79.86 per tonne cfr China.

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