Clients defer BHP shipments

BHP Billiton has received deferral requests for shipments of iron ore from some of its clients, spokesperson Peter Ogden has told MINING DAILY.

BHP Billiton has received deferral requests for shipments of iron ore from some of its clients, spokesperson Peter Ogden has told MINING DAILY.

Ogden said the miner had no plans to cut production, but up to $6 million tonnes of shipments worth $US 600 million at benchmark prices could be postponed until next year.

“We are not cutting production,” Ogden said.

“The only reason to cut production would be if the company was either losing money or failing to sell what it is currently producing and neither is the case for BHP at the moment.

“We are simply putting our shipments on hold.”

According to an article published on tradingmarkets.com, these deferral requests could equate to up to 5% of BHP’s Western Australia iron ore production over the course of the full year.

The company will attempt to sell the production into the spot market, which is trading at a 40% discount to the benchmark price, but would not be drawn on the issue of further sales cutbacks if the market remained soft.

Industry analysts are concerned that continued selling into the spot market at discount prices will only serve to lower the benchmark price of iron ore which could in turn lower Australia’s export and corporate tax revenues.

Deferral requests are not the only problem BHP Billiton is facing.

The company is currently seeking European Commission approval after the miner received a Statement of Objections from the Commission in relation to its pre-conditional offer for Rio Tinto.

A statement from the company said BHP Billiton will continue to work cooperatively with the European Commission and, in accordance with the established merger review process, will be responding in due course to address the issues raised.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.