BHP cannot meet its supply obligations

Comments from Mike Ruppert:

Brace yourselves... The implications are staggering for Asia, especially Japan (joint venture with Mitsubishi), India, Pakistan and China. Every one of those nations is currently experiencing severe power interruptions. The combination of the labor action, combined with heavy rains, probably means that the mines aren't being pumped out. Even if a deal were reached tomorrow the soonest production could be restored would be months. And there is not a single one of those nations that can absorb a loss in supply, let alone be able to afford to pay the outrageous prices that Barack Obama and the U.S. coal industry will charge to ship America's coal overseas while starving its own people.

Until you change the way money works, you change nothing. Have you had enough yet? -- MCR

BHP coal venture declares force majeure in Bowen Basin

THE BHP-Mitsubishi Alliance (BMA), the world's biggest supplier of seaborne coking coal, has declared force majeure at its Bowen Basin operations, notifying overseas customers it cannot meet supply obligations due to continuing industrial action and recent heavy rain.

The Age,

26 March, 2012

About 4000 workers across six of BMA's Queensland mine sites - Goonyella-Riverside, Peak Downs, Saraji, Norwich Park, Gregory-Crinum and Blackwater - went on strike last Tuesday and may remain out indefinitely, pending the outcome of a union meeting tonight.

Goldman Sachs commodities analysts have warned that the long-running industrial action could have broad implications for the metallurgical coal industry given that BMA is the world's biggest coking coal supplier, with about 18 per cent of the seaborne market and 2011 production of 38 million tonnes.

Goldman analysts Christian Lelong and Malcolm Southwood told clients on Friday that the BMA industrial action - by members of the Construction, Forestry, Mining and Energy Union (CFMEU), the Australian Manufacturing Workers Union (AMWU) and the Communications, Electrical and Plumbing Union (CEPU) - had ''the potential to become a supply disruption that impacts market sentiment and prices in the short to medium term''.

BHP confirmed to BusinessDay yesterday that the industrial action and wet weather in March had ''prevented BMA from meeting its obligations with customers'', adding that customers in Europe, Japan, India, Latin America, Korea, Taiwan and China had been notified of the force majeure declaration.

An industry source calculated that BMA, which produces roughly 750,000 tonnes of coking coal a week, could be losing revenue of more than $20 million a day.

CFMEU district president Stephen Smyth said the strike was one of the biggest industrial disputes for 20 years in the coal industry.

A union meeting was held yesterday at Dysart with workers from the Goonyella-Riverside, Saraji, Peak Downs and Norwich Park mines.

Mr Smyth said the meeting resolved unanimously ''to keep sticking it to BHP, and not accept their deal''.

Meetings with workers from the Gregory-Crinum and Blackwater open-cut mines would be held today, after which time union leaders would be able to say whether strike action might continue.

Mr Smyth said the main three issues were hours of work, start and finish times and roster arrangements.

He said the negotiations were ''in the hands of BHP, actually''.

''They should not continue to renege on the in-principle agreement we reached last year.''

Mr Smyth said unionists were prepared to go on striking ''until we get a decent deal … we're in for the long haul.''

BMA was also put behind by a bout of heavy rain the week before last and ''all the pits are full of water'', Mr Smyth said. ''The wet weather will put them back months and months''.

Mr Smyth said 15 coal ships were sitting off Hay Point, near Mackay, waiting to be filled.

BHP said it was proposing to conduct an employee ballot towards the end of April to ''help guide our next steps''.

BHP said details of the effect on production by the strike and rain would be included in the company's quarterly production report.

And from just a few days ago

BHP flags impact of Queensland floods on coking coal

THE mine industry's recovery following the flooding that swept across much of the Australian state of Queensland last December and January hasn't been easy, an executive of mining giant BHP Billiton said today.

.

the Australian,

25 March, 2012

Marcus Randolph, chief executive of the Melbourne-based company's ferrous and coal unit, said BHP's coking coal production had been affected.

Mr Randolph, in a conference call with reporters, said the next set of output figures would reflect the effect of the flooding.

BHP is scheduled to report on output for the three months through March 31 on April 20.

Mr Randolph offered no further details during the conference call.

BHP Billiton in February said coal production in Queensland was significantly affected by persistent rain and flooding in the Bowen Basin region toward the end of the second half of 2010, and that it expected a further hit to production, sales and costs over the remainder of the financial year.