BHP reviews production guidance after cyclone damage

BHP is reviewing production and unit cost guidance after a cyclone caused flooding at its iron ore operations in Western Australia.

The FTSE 100 miner said its early estimate is that production will be 6m to 8m tonnes lower than expected after Tropical Cyclone Veronica forced it to suspend port and rail operations at its Port Hedland site.

BHP said: “While initial inspections show no major damage to our operations, isolated flooding both on site and sections of the rail leading into the port has limited train movements. Consequently, the port is currently operating at reduced rates and not expected to return to full capacity until later this month […] Our 2019 financial year production and unit cost guidance are currently under review.”

The cyclone lashed the west of Australia on 25 March, dumping a year’s rainfall in a few hours. Rio Tinto, BHP’s mining competitor, has said iron ore production will be at the low end of estimates because of damage caused by the cyclone.

Rio Tinto declared force majeure on some contracts with customers. BHP said it was talking to its customers and intended to meet contractual commitments.