A multinational mining group will not meet its contractual obligations in the aftermath of a cyclone.
Rio Tinto has declared a force majeure on certain contracts affected by ex-Tropical Cyclone Veronica, which hit the area between Dampier and Port Hedland on Western Australia’s Pilbara coast as a category three system on March 24.
Rio confirmed parts of the Cape Lambert A port facility has suffered some damage and its iron ore operations in the Pilbara region are still coming back online.
The force majeure is a legal escape clause that removes Rio’s liability in case of any events that make it impossible to perform the agreed work, such as natural disasters, wars, strikes, riots and even some serious crimes.
“As a result, Rio Tinto has declared force majeure on certain contracts and is working with its customers to minimise any disruption in supply,” the company said in a written statement.
Rio predicts it will suffer heavy losses from the cyclone that QMEB predicts to be worth up to US$1.2 billion (A$1.7 billion) based on the iron ore spot price of US$86.3 (A$121.2) a tonne at the time of publication.
“The impact of the disruption to production caused by the cyclone and repairing the damage sustained at the port facilities, combined with the damage caused by the fire at Cape Lambert A in January, will result in a loss of approximately 14 million tonnes of production in 2019,” the company said. “As a result Rio Tinto’s Pilbara shipments in 2019 are expected to be at the lower end of the 338 and 350 million tonnes (100 per cent basis) guidance provided.”
The port facility is capable of loading more than 85 million tonnes (Mt) per annum, mostly exporting product produced at the Robe River Iron Ore Mine and Hamersley Iron’s Yandicoogina mine. In 2018 Rio Tinto shipped 57.4Mt of ore from Yandicoogina and 32Mt from Robe River.
“Safety remains our top priority as we ramp up operations, and undertake the necessary remediation work, following the passing of the cyclone,” a Rio spokesperson said.