Runaway train wreck, copper outages cost BHP $600 million

A BHP iron ore train travelling in Western Australia. (Image courtesy of BHP)

World’s No.1 miner BHP (ASX:BHP) revealed Tuesday the hefty financial burden caused by three separate incidents that affected its iron ore and copper operations in the October-December 2018 quarter.

The Perth-based mining giant said the forced derailment of a fully-laden iron ore train in the Pilbara and unplanned production outages at Olympic Dam and Spence copper mines would cost it $600 million.

November’s train wreck derailment hit BHP’s iron ore output by six million tonnes, and was by far the main factor in the overall lower-than-expected volumes in the final three months of 2018.

Copper production also took a hit in the half year ended December due mainly to lower-than-expected volumes at the Olympic Dam operation in South Australia. Ore processing at the copper, gold and uranium mine was affected by technical issues that caused plant outages, resulting in volumes declining by 45,000 tonnes.

Production of the red metal was also affected by a fire and a short strike as its Chilean Spence copper mine, which saw production decline by 25,000 tonnes.

BHP also flagged a $700 million first-half impact due to higher Australian and Chilean income tax payments than last year, and the settlement of a long-running tax battle with the Australian Tax Office (ATO).

The Western Australia Government said on Monday it was in talks with BHP after an audit had revealed the company had underpaid royalties on iron ore shipments sold via its Singapore marketing hub stretching back over more than a decade.