BHP Suspends Australia Iron Ore Mining After Death

BHP Billiton Ltd/Plc suspended all its iron ore mining in Australia on Friday, shutting in a third of the country's production after the second mine worker death in the past ten days, raising broader safety concerns in its mines.

A BHP spokeswoman could not say when the mines might re-open. In the case of past fatalities that have resulted in the closure of individual mines, including one less than two weeks ago, operations have resumed within a day or two following police and special emergency mine investigations.

But analysts worried that the prolonged loss of BHP's output - 91 million tons a year of ore last year, roughly 10% of the globally traded market - could tighten spot markets, especially after an unrelated force majeure by rival Rio Tinto.

"If it's a day or two, that won't cause much of a ripple, but if the mines remained closed for longer periods, say a week or more, then that could cause some issues," DJ Carmichael & Co analyst James Wilson said.

BHP ordered the giant open pit lodes across the iron-red moonscape of north west Australia closed immediately, fearing its employees would be distracted, a spokeswoman said.

The fatality, which occurred on Thursday at BHP's Yandi mine, 500 kilometres (310 miles) east of the western coast in the Pilbara district, follows the death of another worker at the mine on 26 August.

"We're concerned that incidents such as this may distract employees' attention away from the task, which could put them at risk. So by suspending operations, we can reduce the risks associated with that," the spokeswoman said.

BHP employs around 8,000 people across the Pilbara, roughly 18% of the outback region's total population. It is the world's third-largest supplier of iron ore after Brazil's Vale and Rio Tinto Ltd/Plc

The giant mining pits more resemble excavation sites than most people's idea of mine camps. Ore is simply churned up by bulldozers and carted in trucks to waiting open-topped rail cars.

A typical train is about a mile long and consists of 300 cars hauling 24,000 metric tons of ore each hundreds of miles to waiting freighters. On average a trainload leaves a mine every hour day and night.

Four deaths in a month

The latest death is the fourth fatality at a BHP operation in the past month.

A worker was killed at the Klipspruit coal mine in South Africa when a drill rig toppled over. A day before that an employee was killed at the company's Port Hedland, Australia iron ore loading terminal.

The two most recent deaths in Australia involved workers under contract to BHP from HWE Mining, owned by Leighton Holdings Ltd.

Thursday's fatality was caused by a collision between a light vehicle and a truck, the BHP spokeswoman said.

The traded market for iron ore is sensitive to any disruptions to supply amid a global shortage brought on by growing orders from Asian steel makers.

But China, which is more dependent on the spot market than most nations, is in a better position to weather disruptions than it was earlier this year, with some 60 million tons of ore - roughly one month's consumption - is stockpiled in ports.

Competition for ore has enabled BHP and other Australian miners to raise ore prices by as much as 86% this year.

Rio Tinto this week declared force majeure - meaning it cannot meet its deliveries on time - on some of its iron ore orders after a rail car toppled into an ore dumper at an Australian port. No injuries were reported in that incident, according to a Rio Tinto spokesman.

by James Regan.