Iron ore shipments from UK-Australian mining company BHP will be disrupted for the rest of this year with maintenance on a railcar dumper, as the firm moves forward with plans to expand output from its Pilbara iron ore operations in Western Australia (WA) to 330mn t/yr from its current target of 276mn-286mn t for the 2020-21 fiscal year to 30 June.
BHP has appointed Australian engineering firm Monadelphous to refurbish its railcar dumper No.3 at the Nelson Point terminal at Port Hedland, with work expected to be completed this year. It has also asked Monadelphous to work on conveyors and transfer chutes across the Nelson Point and Finucane Island terminals at Port Hedland, in a project that should be completed by the end of 2021.
BHP has approvals in place to increase shipments from Port Hedland to 290mn t/yr but has been slow to increase to this target since it was announced in August 2014. The 290mn t/yr was still touted as a "medium-term" target when it finally secured approval to increase throughput to this level at Port Hedland in February 2018, although BHP has achieved run rates of 290mn t/yr intermittently over the past two years.
The firm is now looking beyond 290mn t/yr and is focused on the port, which remains a bottleneck, despite an upgrade to some railcar dumpers last year. The consultation period to raise approvals to 330mn t/yr is likely to take some time, particularly as increased throughput at Port Hedland has drawn community opposition from those concerned about ore dust.
BHP has been reluctant to invest heavily in additional iron ore capacity over the past several years because of potential oversupply. Growth projects across the WA's Pilbara and in Brazil led to the iron ore price for 62pc Fe falling to a low of $40/t in early 2016 from over $100/t in mid-2014. It took more than three years for demand to catch up with supplies and prices to briefly return above $100/t in mid-2019, helped by shutdowns in Brazilian capacity because of tailing dam failures.
Argus last assessed the ICX price for 62pc Fe at $121.90/t on 14 August with firm demand from China and iron ore production delays cause by Covid-19 outbreaks in Brazil.
