BHP under the microscope

BHP Billiton has declared annual metallurgical coal contracts dead, remains keen to introduce fly-in fly-out arrangements into Queensland and is targeting up to 20 million tonnes per annum at its Indonesian met coal project, according to analysts.
BHP under the microscope BHP under the microscope BHP under the microscope BHP under the microscope BHP under the microscope

Courtesy BHP Billiton.

Lauren Barrett

The Macquarie Private Wealth analyst report, prepared after a site visit, said the BHP Billiton Mitsubishi Alliance wanted to introduce FIFO as a supplementary measure to “recognise the broader challenges with labour availability in the industry”

On top of this BMA said it had identified a demand for many new workers to operate on the FIFO basis.

The impact from ongoing strike action at BMA was described as “fairly modest”, with Macquarie revealing stoppages were reportedly only limited to a single half or full shift at one mine at each time.

Macquarie said BHP expected to price none of its metallurgical coal on an annual benchmark in the 2012 financial year while also anticipating 60% of metallurgical coal sales in FY2012 to be on a monthly, index-linked or spot basis.

Moving the spotlight on to BHP’s 75% owned IndoMet coal project in Kalimantan, Macquarie said the asset had gone through a few cycles of consideration and remained at pre-feasibility stage.

“Planning presently centres on a first development at 0.5 million tonnes per annum to provide an initial operating platform,” Macquarie said.

It predicted that long-term the mine would achieve 20Mtpa. However, long-term viability depended on a dedicated railway, which would require third party users.

Macquarie said BHP was the preferred developer for the new Abbot Point terminal, which is expected to target an initial capacity of 25Mtpa.

Macquarie noted BHP’s pursuit for a dedicated railway, which would link Goonyella Riverside mine to the company’s proposed terminal at Abbot Point.

“Unsurprisingly, the company continues to push strongly for exclusive access rights to any line it might build,” Macquarie said.

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