As BHP points to work restrictions, Omicron has reported further disruptions, Reuters has warned

By Indranil Sarkar and Shashwat Awasthi

(Reuters) – BHP Group (NYSE 🙂 joined mining giant Rio Tinto (NYSE 🙂 on Wednesday to report further disruptions to COVID-19, including labor shortages, and the effect of the Omicron variant is expected to last for the second half. its economic year.

The BHP said easing Western border restrictions in Western Australia on February 5 could lead to some short-term disruptions in the operating environment as the pandemic evolves across the state.

The mineral-rich state has remained tight on border controls during the pandemic, and the rise in Omicron cases across Australia has led to a shortage of mining workers and train drivers to transport millions of tonnes of goods.

As the country was subject to a wave of Omicron, BHP’s production of certain products fell in the December quarter. Work cuts and wet weather also forced the global miner to cut its annual forecast for metallurgical coal.

“Employee absenteeism due to the COVID-19 Omicron variant is expected to continue in the early second half of the 2022 fiscal year,” the company said.

Rio Tinto announced slightly weaker-than-expected 2022 iron ore shipments on Tuesday, partly due to tight labor market conditions.

However, in the second quarter of the BHP, Western Australian iron ore production rose 5% to 73.9 million tonnes, helped by the strong performance of the Jimblebar mine and increased production in the $ 3.6 billion South Flank project.

“Because iron ore drives so much cash flow, the impact of today’s result should be pretty much silenced, given that its relative strength will likely help offset the decline elsewhere,” said Kaan Peker, an analyst at RBC Capital Markets.

BHP shareholders will vote on Thursday on whether or not to merge its structure into a single Australian listed company in London.

Miner’s shares were flat at 0335 GMT, while the broader market fell 0.9%.