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Cloudy future: Rain hurts, but China bans start BHP thinking about job cuts


The return of a wet season in Queensland has dragged down the production of BHP’s coal business but trade bans from China have been far worse.

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It is understood that BHP expects the bans and the associated price impacts to remain in the short to medium term and if prolonged, the likelihood of job losses and operational cuts would increase.

In its third quarter production results, BHP said metallurgical coal production guidance has been reduced to between 39 and 41 million tonnes as a result of significant wet weather impacts during the December 2020 and March 2021 quarters.

But it was also finding the market tough and even though it has been able to redirect much of coal to other markets, it had been at a much lower price.

Before China imposed its trade bans on a wide range of Australian goods, about 20 to 30 per cent of BHP’s metallurgical coal production was exported there.

While it has been able to redirect to other markets it is now facing challenges from Canada and Mongolia.

At its half-year results, BHP said earnings from its Queensland business was down 94 per cent and it now expects the tough times to continue.

Although coal production was impacted by the wet season there had been “strong underlying operational performance, including record stripping at BMA and record production at Goonyella’’.

At South Walker Creek, production decreased despite record truck and shovel stripping in the March 2021 quarter, as a result of higher strip ratios due to ongoing impacts from geotechnical constraints and lower yields.


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