BHP's runaway train halts rail operations

BHP has suspended its Western Australian iron ore rail operations after it deliberately derailed a fully-laden train. Approximately 1.5 km of track is substantially damaged and will take about one week to clear. BHP is unlikely to have sufficient port stocks from which to draw for this period and will need to liaise with clients in regard to their supply contracts. Apart from potential supply disruptions, the immediate cost of clearing the site and resuming rail operations is expected to run into the tens of millions. Disruption to shipments will significantly add to this cost. We estimate that BHP has 3 days of stockpiles and 4 days of no rail in the first week plus another week of partial output. This translates to about 3 Mt of lost shipments, and potentially more, depending on how long railing is at reduced capacity.