BHP productivity plans stall due to outages, train derailment

Date: Feb 20, 2019

BHP expects its productivity gains will be “broadly flat” in the 2019 financial year following several unplanned outages at Australian and Chilean operations, and a forced train derailment in the Pilbara last year.

The Olympic Dam mine in South Australia suffered an acid plant outage last August due to the failure of several boiler tubes that caused issues for two months. The Spence copper project in Chile, meanwhile, was partially closed in September due to a fire at its electro-winning plant.

BHP’s Nickel West operation in Kalgoorlie was also subject to a fire in August that led to a three-week shutdown.

In November, BHP suffered a high-profile incident after having to deliberately derail a runaway haul train en route to Port Hedland in Western Australia due to brake failure. While no one was on board the train and nobody was hurt, this led to a large financial sting for the company.

In BHP’s December half-year financial results, the company reported a combined negative impact of $US835 million ($1.16 billion) due to these four incidents, and a negative movement in productivity of $US460 million.

This means that BHP’s productivity for the 2019 financial year has been reduced from its previous guidance of $US1 billion.

BHP chief executive officer Andrew Mackenzie, commenting at an investor presentation yesterday, said the company’s second half performance would build on last year’s production problems, which have essentially been solved.

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