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Covid-related staff shortages dent BHP’s iron ore, coal output as miner warns more to come in WA, Queensland

Rebecca Le MayNCA NewsWire
Rail labour shortages partly offset the ramp up of production at BHP’s new US3.6bn ($A5bn) South Flank iron ore mine, 56km northwest of Newman in Western Australia’s Pilbara region. NCA NewsWire/Rebecca Le May
Camera IconRail labour shortages partly offset the ramp up of production at BHP’s new US3.6bn ($A5bn) South Flank iron ore mine, 56km northwest of Newman in Western Australia’s Pilbara region. NCA NewsWire/Rebecca Le May Credit: NCA NewsWire

BHP’s latest quarterly report suggests the mining giant is bracing for the West Australian border to go up on February 5, warning it may dent production at its all-important iron ore operations.

The company reported on Wednesday that iron ore output in the December quarter was up slightly, crediting factors including the ramp up of its massive new South Flank mine in WA, saying the rise came despite border restrictions-related rail labour shortages.

The border reopening will mean access to more labour, but BHP warns it “may introduce some short-term disruption to the operating environment as the Covid-19 pandemic evolves in the state”.

RBC Capital Markets mining analyst Kaan Peker said the production performance was above expectations, with BHP “continuing to post superior performance versus Rio in the Pilbara”.

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Reporting a drop in metallurgical coal output, the company downgraded its full-year target, blaming La Niña-related wet weather coupled with virus-related labour shortages at its Queensland mines.

“Following the recent easing of Queensland’s border restrictions, Covid-19 related absenteeism has increased and remains a risk for the remainder of the year,” BHP said.

BHP is bracing for WA's February 5 border reopening.
Camera IconBHP is bracing for WA's February 5 border reopening. NCA NewsWire/Rebecca Le May Credit: NCA NewsWire

It comes as Alec O’Connell, the head of elite Perth boys’ school Scotch College, reportedly called on Premier Mark McGowan to push back the reopening date to give schools more time to prepare, including allowing parents more time to get their kids vaccinated.

Mr O’Connell also chairs the Association of Heads of Independent Schools of Australia WA branch.

Repeatedly asked at recent press conferences if February 5 still stood as the reopening date - based on modelling of the Delta variant - Mr McGowan has insisted it won’t change.

When he first announced the date, the Labor leader said it would allow WA to reopen “on its own terms”, suggesting there may have been pressure from the federal government.

Meanwhile, the Mining and Energy Union has accused mining companies of dropping the ball on Covid-19 control measures like social distancing and hygiene.

Rail labour shortages partly offset the ramp up of production at BHP’s new US3.6bn ($A5bn) South Flank iron ore mine, 56km northwest of Newman in Western Australia’s Pilbara region. NCA NewsWire/Rebecca Le May
Camera IconRail labour shortages partly offset the ramp up of production at BHP’s new US3.6bn ($A5bn) South Flank iron ore mine, 56km northwest of Newman in Western Australia’s Pilbara region. NCA NewsWire/Rebecca Le May Credit: NCA NewsWire

Queensland district president Stephen Smyth claimed they had not updated their risk management plans to take into account Omicron and had “abandoned most of the measures required earlier in the pandemic”.

“It’s become very clear that mining companies can’t rely only on vaccination as a silver bullet to keep workplaces safe,” Mr Smyth said.

He suggested Covid safety measures including rapid testing, provision of N95 masks and “deep cleaning” of coal mines.

A BHP spokesperson said the health and safety of staff, their families and the communities in which the company operated had been the number one priority throughout the pandemic.

“Vaccination remains the most effective control available to combat the risk of serious illness and possible death from Covid-19,” the spokesperson said.

The union does not support employer jab mandates in the absence of public health orders and is challenging BHP’s requirement for all staff to show proof of vaccination by January 31.

A decision in the Fair Work Commission is expected this week.

BHP shareholders will on Thursday vote on its proposal to de-list from the London Stock Exchange to make the Australian Securities Exchange its sole listing.

Mr Peker said RBC expected the plan would pass.

Originally published as Covid-related staff shortages dent BHP’s iron ore, coal output as miner warns more to come in WA, Queensland

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