BHP chief assures customers after desert railway crash
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BHP chief assures customers after desert railway crash

The head of mining giant BHP has assured customers it will fulfil its contracts to supply iron ore, despite a dramatic freight train derailment in remote Western Australia disrupting exports of its most lucrative commodity.

During an investor meeting on Thursday, BHP was asked about the impact of the deliberate derailment of a train loaded with iron ore in the Pilbara region, 120 kilometres south of Port Hedland, which also severed the crucial rail link between its mines and shipping hub.

The company earlier this week warned its stockpiles of iron ore – a key steelmaking ingredient – were insufficient to cover the anticipated period of disruption, and BHP would need to liaise with its customers on its contractual commitments.

But chief executive Andrew Mackenzie on Thursday said the company had a recovery plan in place, was confident it would “not be letting down any of our customers”, and did not intend to declare force majeure on its contracts. “We’ve got no reason why we have to change the contracts and agreements we have with existing customers,” he said, following the company’ annual general meeting in Adelaide.

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Force majeure is a clause in a contract that allows a seller or buyer not to fulfil contractual terms when they are affected by an extraordinary event or a circumstance outside of their control.

The runaway BHP train, consisting of four locomotives and 268 wagons filled with iron ore, was deliberately derailed by BHP’s remote operations centre on Monday. It had been travelling from Newman to Port Hedland when the driver disembarked at a siding to inspect an issue with an ore car, before the train started moving again.

A BHP train travelling between the Pilbara and Port Hedland.

A BHP train travelling between the Pilbara and Port Hedland.Credit:Erin Jonasson

Mr Mackenzie said it was too early to provide further details on circumstances of the incident or on the cost. But with 130 people working on removing the train wreckage and repairing the 1.5 kilometres of damaged track, he said the company expected to resume normal exporting shortly.

“I know people will be listening and wondering what the impact of all this will be,” he said.

“We have people working night and day to get things back to normal. We are reasonably confident we can resume our shipments within about a week.”

Mr Mackenzie said an investigation had been launched into the incident.

He said BHP would bolster its investment in its railways and safety, and had a number of investments already in planning “before this accident happened”.

BHP chief executive Andrew Mackenzie.

BHP chief executive Andrew Mackenzie.Credit:Wayne Taylor

“We will continue to invest to make our railways, as in line with all of our operations, safer,” he said.

Mr Mackenzie praised the “very swift thinking” of BHP’s staff on shift at the time, who “realised that if they didn’t force the derailment, it could have caused a lot of damage”.

“They threw the points at a time when they knew it was moving quickly,” he said. “They made it safe, and nobody was hurt.”

Macquarie Wealth Management analysts said they did not expect the BHP derailment to have a “material impact” on the company’s volumes, “as the line is only expected to be out for a week”.

Business reporter for The Sydney Morning Herald and The Age.

Hamish Hastie is a Fairfax Media business reporter writing from the WAtoday offices in Perth. He was raised in Armadale in Perth's south east and covered the area for four years at the Examiner Newspaper before a stretch writing for the Chamber of Commerce and Industry WA's business magazines.

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