BHP expects derailed train to impact its Australian iron ore exports

MELBOURNE (Reuters) – Mining giant BHP Billiton (BHP.AX) (BLT.L) expects an interruption of its Australian iron ore exports after a nearly 3 km long train loaded with this product was derailed by force this week after it ran into direction of a key navigation center.

The company said Wednesday in a statement that its iron ore reserves on the Port Hedland hub should not cover the entire period of disruption following the incident and that it would remain in contact with its customers at contractual obligations during this period.

The derailment occurred after the train fled at high speed for nearly 100 km (62 miles) when the driver left the cabin for an inspection. The incident in an isolated area about 120 km south of the world's largest iron ore terminal in the northwestern part of the country did not hurt anyone.

The miner said his normal railway operations were suspended, estimating that about 1.5 km of railroad tracks had been damaged. Its mining sites continue to operate and the company expects a partial recovery of its rail operations in about a week.

"Recovery operations are in progress. We can not speculate on the outcome of the investigation, "said BHP.

"However, we are working with the relevant authorities and we continue to focus on the safe recovery of our operations."

Images from a local television channel showed a shipwrecked locomotive next to a chain of forked carts in the Outback bush.

The wreckage should be removed over the next few days and track repairs will begin at about the same time, said BHP.

Analysts said they expected BHP to be able to recover any delays in shipments and that the impact on operations would have little impact.

"Investors are keeping a close watch on the situation in the Pilbara after BHP announced that it will stop all rail operations," ANZ reported in a report.

The Australian Transportation Safety Bureau said Monday that an investigation into the incident was underway. A report is expected to be released in the second quarter of 2019.

Until now, shipments of BHP's medium grade iron ore shipments to the leading Chinese market have not been disrupted, traders said.

"I do not think any disruption would matter, because the demand is now focused on low-grade iron ore," said an iron ore trader in Singapore.