BHP Billiton Declares Force Majeure at Bowen Basin Due to Strike, Heavy Rain
BHP Billiton (ASX: BHP), the world's biggest miner, has declared on Monday a force majeure at its Bowen Basin coal mines in Australia due to the strikes and heavy rain.
The move could cause a sharp rise in prices of metallurgical coal since BHP, which operates seven coal mines in Bowen Basin, supplies about one fifth of the world supply of coking coal used in steel production.
The Bowen Basin mines, a joint venture between BHP and Mitsubishi Development, produces about 58 million tonnes of coking coal a year.
Analysts estimate that the work stoppages and heavy rains have caused the loss of 2 to 3 million tonnes of coal this year.
Rolling strikes had been held by about 3,500 BHP workers who belong to the Construction, Forestry, Mining and Energy Union (CFMEU), the Australian Manufacturing Workers Union and the CVommunications, Electrical and Plumbing Union since the middle of 2011 while Queensland, where the mines are located, have been battered by heavy floods in 2011 and heavy rains in 2012.
CFMEU District President Stephen Smythe described the strike as one of the biggest industrial disputes in the coal industry for 20 years.
Analysts were not surprised by the BHP move since negotiations between BHP and the employees' union had been ongoing for the past 16 months, but the situation has worsened with the union announcing that it has stepped up industrial action.
Unionised workers at all BMA mines have been on strike since March 27 until April 2, while employees at the Crinum, Gregory and Blackwater mines will walk off their jobs on April 3 and 4.
The union has rejected twice BHP's proposed contracts over work hours and scheduling, but BHP said it still plans to hold a ballot on another proposed contract at the end of April. However, a union spokesman said the new contract would likely be thumbed down by members.
Even if there is in strike, the rains have caused the mines to be filled with water at its Goonyella Riverside, Peak Downs, Saraji, Norwich Park, Gregory Crinum and Blackwater mines.
BHP said it has informed its customers across Europe, Japan, India, Latin America, Korea, Taiwan and China of its inability to meet their orders for coal as 15 coal ships wait to be filled with the commodity off Hay Point.
