BHP Forced to Derail Runaway Iron Ore Train in Australia

By Rebecca Keenan and Thomas Biesheuvel | November 5, 2018

BHP Billiton Ltd. was forced to derail a runaway train that traveled almost 60 miles without a driver across the Pilbara, a major iron ore producing area in Western Australia.

The world’s top mining company halted all train operations in the region, where it produces and ships iron ore, a key steelmaking ingredient. BHP, which runs trains that are almost 3 kilometers (1.9 miles) long from its giant iron ore mines, said it’s working with local authorities to investigate the incident.

The company said the driver was inspecting an issue with the train when the locomotive ran away. The loaded train, which consisted of four locomotives and 268 wagons, then traveled 92 kilometers toward Port Hedland before being deliberately derailed from BHP’s remote operations center in Perth.

Iron ore producers in Western Australia run some of the world’s longest trains. BHP transports material from its large mines — which make up almost 40 percent of its profits — to Port Hedland, where it ships to customers in China and Japan. The company has more than 1,000 kilometers of rail infrastructure in the ore-rich Pilbara region.

BHP said operations continue at its mines, but didn’t give any details on the potential impact on production. The shares rose 1.3 percent in London amid broader gains among miners.

“If there is significant track damage, it could be that train loadings and speeds could be constrained post repairs and restarting of shipments,” BMO Capital Markets said in a note. The bank said BHP’s operations account for about 20 percent of the global iron ore trade.

The top miners have been looking to increasingly automate logistics. Rival Rio Tinto Group earlier this year completed its first driverless train in Western Australia when it delivered 28,000 metric tons of iron ore along a 280-kilometer route.

BHP earlier this year reported reliability issues with port car dumpers. The producer’s Western Australian operations include five mines and four processing hubs, including joint ventures with Mitsui & Co. and Itochu Corp.

While the likely length of the rail stoppage remains unclear, any disruption to shipments from the port could pressure iron ore prices. The raw material used to make steel soared in October, with the benchmark 62 percent grade advancing about 10 percent as Chinese steel mills ramped up production before anti-pollution curbs kick in.

Port Hedland is the world’s largest iron ore export port with a total annual throughput of 519 million metric tons in 2017/2018, according to Pilbara Ports Authority. As well as BHP, it’s used by miners including Fortescue Metals Group Ltd. and Roy Hill Holdings Pty.

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