Miners, industry face $150 million hit from SA blackout
South Australia’s biggest mining and industrial sites face losses of more than $150 million from last week’s blackout.
South Australia’s biggest mining and industrial sites are facing revenue losses of more than $150 million from last week’s blackout as they plan for at least another week without power.
And the extended production suspension is starting to impact on global metal prices, helping pushing lead prices on the London Metal Exchange to a 16-month high.
The already struggling Whyalla steelworks and the Prominent Hill copper and gold mine would be without power until at least Tuesday next week, their operators said yesterday.
And while BHP Billiton’s big Olympic Dam copper and uranium mine, the nation’s biggest copper mine and the state’s biggest power user, will not say when it expects its power to be back up and running, it is thought to be in the same situation.
The sites have now been off line for five days since severe storms toppled transmission towers in the state’s north and caused the entire South Australian power system to trip.
Power has now been restored to residents around the state.
Calculations by The Australian show the suspension of just Whyalla, Olympic Dam and Prominent Hill is costing about $12m a day in lost revenue, meaning a 12-day closure, if power is restored by Tuesday, represents $144m in lost revenue.
On top of this, Nyrstar’s Port Pirie lead smelter, where molten slag froze in the blast furnace because of the extended power failure, has flagged pre-tax earnings losses of up to $7m as it takes 10 to 14 days to repair its plant.
Yesterday, Prominent Hill’s owner, Oz Minerals, which is facing estimated revenue losses of $3m a day, told the stock exchange the extended outage meant the company would struggle to meet full-year gold production guidance.
“Electricity transmission to OZ Minerals’ Prominent Hill mine is expected to be progressively restored in the next seven to 10 days, following recent severe storm damage to South Australia’s transmission lines,” it said.
“The company reiterates that the time frame for full restoration of power to Prominent Hill is ultimately outside of its direct control.”
At Whyalla, whose owner Arrium is in administration and which is being set up for a trade, there is also no sign of a near-term power fix.
“They’re still not producing any steel ... and they’ve been told they won’t get full power back until Tuesday next week,” a spokesman for Arrium administrator KordaMentha, which estimates the outage is costing $30m a week, said yesterday.
The good news at Whyalla is that enough self-generated and grid power has been obtained to avoid similar plant damage to that experienced at Port Pirie.
The bad news is that buyers looking at Arrium’s Australian business, which includes South Australian iron ore mines and other steel businesses, have been alerted to a major power supply risk at Whyalla.
Port Pirie is one of the world’s biggest lead smelters, producing 185,000 tonnes a year of the industrial metal, along with copper concentrate, silver and gold.
The outage contributed to an 11 per cent jump in the London Metal Exchange lead price last week to $US2123 a tonne.
It was the metal’s biggest weekly percentage price jump since 2010.
“You can’t remove this much metal from the market for that amount of time and not expect people to scramble around for new supplies,” a Sydney metals trader who has been buying lead futures since the storm hit told Reuters.
There were also some reports attributing a rise in copper prices to suspended production at Olympic Dam and Prominent Hill, where the outage has suspended about 3 per cent of the world’s mined copper production.
BHP, which is facing revenue losses of $5m a day from Olympic Dam, said power had been returned to the town of Roxby Downs but the mine remained on care and maintenance.
