A truck drives on a road through a BHP iron ore mine at Newman, north of Perth, Australia. Picture: REUTERS/TIM WIMBORNE
A truck drives on a road through a BHP iron ore mine at Newman, north of Perth, Australia. Picture: REUTERS/TIM WIMBORNE

BHP Group posted a drop of nearly 5% drop in first-quarter iron-ore output on Tuesday due to maintenance work at its Jimblebar mine and a shortage of rail labour due to Covid-19 border restrictions.

But the world’s largest miner left its annual production outlook unchanged, unlike rival Rio Tinto which last week cut its shipments forecast because of the tight labour market.

The shortage had led to Rio and BHP asking train drivers to work longer hours as strict border restrictions affected the flow of workers who tend to live in cities and fly in and fly out of remote mine sites.

There is also demand concern stemming from a debt crisis in the Chinese property market, which along with Beijing’s stricter emission controls, halved iron-ore prices from a record peak in May.

BHP's share price fell about a quarter since the company posted its best annual results in nearly a decade in August, where it also laid out plans to scrap its dual-listed structure and exit petroleum as part of a shift towards “future-facing commodities”. Its stock was down 1.5% on Tuesday in a weaker overall market.

Western Australian iron-ore production on a 100% basis fell to 70.6-million tonnes in the September quarter from 74-million tonnes a year earlier. But it was higher than the 68-million tonnes forecast by RBC Capital Markets.

Output at the petroleum business, which is set to be bought by Woodside Petroleum, rose 3% to 27.5-million barrels of oil equivalent.

Metallurgical coal output fell 9% to 8.9-million tonnes, while thermal coal production jumped 17% to 4.2-million tonnes. An acute global shortage of coal, including in China, has driven a surge in the commodity’s prices leading to  power outages.

Reuters

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