BHP Billiton: force majeure at Bowen Basin coal mines
PERTH (Reuters) - The world's biggest miner, BHP Billiton BHP.AX, is declaring force majeure at its coal mines in Australia's Bowen Basin due to prolonged union strikes and heavy rain, the company said on Monday, in a move that could spur prices of metallurgical coal.
About 3,500 unionized workers have been staging rolling work stoppages at the mines since mid-2011 and Australia's eastern state of Queensland, where the mines are located, was lashed by heavy flooding last year and heavy rain this year.
BHP Billiton operates seven coal mines in the Bowen Basin that supply about a fifth of the world's metallurgical coal, or coking coal used in steelmaking.
"Now that this very important supply block is dropping out of the market, it's got the potential of driving prices up... I'd say within the next few days we'll see life (in prices)," Tom Price, an analyst with UBS in Sydney, said.
The mines, owned by BHP Billiton Mitsubishi Alliance (BMA), a joint venture between BHP and Mitsubishi Development Pty Ltd, have an annual capacity of about 58 million metric tonnes (63.93 million tons).
UBS's Price estimated that the strikes and heavy rains have resulted in 2 to 3 million tonnes of lost production this year.
But after about 16 months of tense negotiations between BHP and the worker's union, the declaration of a force majeure did not come as a surprise to the market, industry experts said.
BHP's stock price was up 51 cents, or 1.47 percent, at $35.12 per share.
Last week, the mining workers' union announced it was stepping up its strike actions and union workers at all BMA mines have been on strike since last Tuesday through this Monday. This week, workers at three BMA mines - Crinum, Gregory, and Blackwater - will be on strike on Tuesday and Wednesday. Continued...