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BHP warns of Covid impact in Western Australia ahead of border opening

By Frank Prenesti

Date: Wednesday 19 Jan 2022

BHP warns of Covid impact in Western Australia ahead of border opening

(Sharecast News) - Australian mining giant BHP Group warned of lower iron ore shipments due to labour shortages caused by Covid-19 border restrictions imposed by the Western Australian state government.
Second-quarter iron ore production from Western Australia rose 5% to 73.9m tonnes, helped by strong performance at its Jimblebar mine and ramped up production at its $3.6bn South Flank project, BHP said on Wednesday.

It added that the planned easing of border restrictions in Western Australia next month could also cause some short-term disruption to the operating environment as the pandemic evolves in the state.

on Wednesday joined rival Rio Tinto (NYSE:RIO) in warning of further disruptions from COVID-19, including labour shortages, and said the impact of the Omicron variant will last into the second half of its financial year.

"Workforce absenteeism arising from the COVID-19 Omicron variant is anticipated to continue into the early part of the second half of the 2022 financial year," the company said.

Western Australia's government has taken a zero-tolerance approach to border controls during the pandemic, causing a labour shortage, heightened by the recent surge in Omicron cases across Australia.

The Omicron wave of cases mean BHP's production of some commodities fell in the December quarter, while Labour constraints and wet weather also forced it to cut annual forecasts for metallurgical coal.

"Cost control remained strong across the business, in the face of a more inflationary environment. Unit cost guidance remains intact bar a change to metallurgical coal which is a function of the lowering of production guidance as a result of significant wet weather and in anticipation of Omicron headwinds in the early part of the second half of the financial year," said chief executive Mike Henry.

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