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Floods to hit BHP output long term


Floods to hit BHP output long term


Eastern Australia’s devastating floods will hit production at BHP Billiton’s coal mining operations for at least six more months, the company believes.

With heavy rain in the area since November its output in Queensland state fell by nearly a third in the last quarter.

BHP and other miners have been forced to postpone shipments. Mining industry analysts expect coking coal prices to go up temporarily.

“When combined with disruption to external infrastructure, we expect an ongoing impact on production, sales and unit costs for the remainder of the 2011 financial year,” BHP said in fiscal second-quarter production data, showing coal output dropped 30 percent versus the previous quarter.

That is significantly more damage than the six percent loss in coking coal production that BHP’s rival Rio Tinto this week said it suffered from the floods.

Australia usually accounts for two-thirds of the global coking coal trade and the shortages have forced Asia’s steelmakers to look elsewhere for supplies.

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