BHP Coal Production Hit by Bushfires in Q4 CY19

BHP, an Anglo-Australian multinational mining company, has said that its coal operations were affected by the Australian bush-fires which had deteriorated air-quality at the mines.

The devastating calamity not only affected wild-life in the region, but also impacted BHP’s coal production in the process. Apparently, company’s coal output had noted a slender rise to 17 MnT during Q4 CY19 (Sep-Dec’19) as against 16.94 MnT noted in the year-ago period.

BHP had reported that its thermal coal operations were majorly impacted by the smoke from regional bush-fires and dust which had lowered the output volumes. Apparently, thermal coal production, including output from New South Wales project in Australia, was down 9% Y-o-Y to 6.078 MnT in Q4 CY19 compared with 6.667 MnT in Q4 CY18.

Besides, lower coal output was also a result of the change in product strategy to focus on higher quality products and adverse weather witnessed at Cerrejón in the previous quarter.

The company stated that it would continue to monitor the situation, but if poor air quality continues to deteriorate, then operations could be further constrained throughout the subsequent half-year period as well.

Coking coal production increased 6% on the year to 10.924 MnT in Q4 CY19, in a period where strong operational performance was partly offset by planned major wash plant shutdowns, low opening raw coal inventories at Blackwater mine, and truck and shovel under-performance at South Walker Creek mine.

BHP’s Coal Production in Q4 CY19

Source: BHP
Quantity in MnT

The company had noted a negative growth in overall production during the second-half period of CY19, in line with the drastic fall in coal prices. BHP’s coking coal production decreased 2% Y-o-Y to 20.282 MnT in Jul-Dec’19, whereas production of thermal coal was down 12% Y-o-Y to 11.725 MnT in the period.

Incidentally, average realized price of coking coal had fallen 22% Y-o-Y to USD 140.94/MT, while price of thermal coal was assessed 30% lower on the year at USD 58.55/MT in the six month period.