A major global resources company has confirmed damage from Tropical Cyclone Veronica will bring up to $985 million in lost revenue.
BHP predicts the category three system, which hit the area between Dampier and Port Hedland on Western Australia’s Pilbara coast on March 24, will reduce iron ore production by between 6 to 8 million tonnes.
QMEB estimates at the iron ore price of US$87.52 (A$123.14) a tonne, at the time of publication, this loss could cost between US$525.12 million (A$738.92 million) and US$700.16 million (A$985.21 million).
“As a result, our 2019 financial year production and unit cost guidance are currently under review,” BHP said in a statement to the Australian share market. “Final production impacts and revised production and unit cost guidance will be disclosed once they are finalised.”
Just one day earlier Rio Tinto declared a force majeure, a legal escape clause that removes Rio’s liability in case of any events that make it impossible to perform the agreed work, on certain contracts affected by the same cyclone.
However, BHP confirmed it has made no such declaration.
“We are engaging with our customers and intend to meet our contractual commitments,” the statement from BHP said.
Rio had suffered some damage to parts of its Cape Lambert A port facility and its iron ore operations in the Pilbara region were still coming back online.
However, BHP fortunately had no major damage to its operations.
“Isolated flooding both on site and sections of the rail leading into the port has limited train movements,” the company said. “Consequently, the port is currently operating at reduced rates and not expected to return to full capacity until later this month.”
“With safety as our highest priority, BHP Port and Rail Operations in Port Hedland, Western Australia, are ramping-up after being suspended due to Tropical Cyclone Veronica,” BHP added.