By Rhiannon Hoyle 
 

BHP Group Ltd. said a surge in Covid-19 cases in Australia is causing a shortage of workers at its coal pits that will likely constrain how much steelmaking coal the world's No. 1 miner can produce in its fiscal year.

BHP, which in eastern Australia runs the world's biggest metallurgical coal export operations in joint venture with Mitsubishi Corp., on Wednesday reported an 8% fall in first-half production of the commodity, to 17.7 million metric tons. That prompted the miner to downgrade its full-year production forecast to 38 million-41 million tons, from a prior 39 million-44 million ton estimate.

Australia is experiencing its worst surge in Covid-19 infections of the pandemic to date. In Queensland state, where BHP mines metallurgical coal, cases have climbed quickly after controls on the state border were relaxed.

"Following the recent easing of Queensland's border restrictions, Covid-19 related absenteeism has increased and remains a risk for the remainder of the year," BHP said.

La Niña weather patterns have also had a big impact on its Queensland coal mines in recent months, with rainfall having doubled, BHP said.

BHP said first-half group copper-equivalent production--excluding the petroleum division it is combining with Australia's Woodside Petroleum Ltd.--was down by 4% versus a year ago.

In addition to weaker-than-expected metallurgical coal output, BHP's copper production was also sharply lower.

The miner reported first-half copper output of 742,000 tons, down 12% on a year earlier. BHP now expects full-year copper volumes at the low end of the company's 1.59 million-1.76 million ton projection, it said.

BHP's Chilean copper mines have also been heavily disrupted during the pandemic, although the miner said the impact had lessened in recent months amid rising vaccination rates and what BHP said were successful control measures at its mine sites.

The company softened its expectations for full-year copper output in big part because of a worker death at a desalination plant, which had disrupted BHP's operations, it said.

BHP meantime reported a 1% lift in first-half iron-ore output to 129.4 million tons. BHP is the world's third-largest producer of the steel ingredient.

"Cost control remained strong across the business, in the face of a more inflationary environment," too, Chief Executive Mike Henry said.

 

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

 

(END) Dow Jones Newswires

January 18, 2022 17:57 ET (22:57 GMT)

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