Australian mining giant declares 'force majeure'

Australian mining giant declares 'force majeure'

MELBOURNE (Reuter): Australian mining giant BHP said yesterday it had declared 'force majeure' on customers of its idle Ok Tedi copper mine in Papua New Guinea because of a drought in the South Pacific nation.

BHP -- the Broken Hill Pty Co Ltd -- said the prolonged dry spell would prevent it meeting annual contracts to supply copper concentrates from the mine.

The force majeure, relieving BHP of its contractual obligations, would come into effect in 60 days, BHP spokesman Vincent Bull said from the PNG capital, Port Moresby.

The mine has been crippled by severe drought which has dried up its sole supply line, the Fly River which winds from the parched western highlands to the coast.

The mine last year shipped 200,000 tonnes of copper contained in concentrate, but supplies have been unable to reach port since August 11. Shipments were also disrupted earlier in the year.

"We have been postponing shipments from one month to the next but we have got to the point now where we're not able to catch up with all those deferred shipments before the end of the year," Bull told Reuters by telephone.

"By declaring force majeure we have given them a choice -- if force majeure continues for 60 days they have an option of canceling the tonnage they would otherwise have been forced to take, or schedule (the shipments) at a later date," he added.

BHP operates the Ok Tedi mine and owns 52.6 percent of it. Canada's Inmet Mining Corp owns 17.4 percent and the Papua New Guinea government has the rest.

Ok Tedi has long-term supply contracts with Germany's Norddeutsche Affernie, Finland's Outokumpu Oy, Philippines Associated Smelting and Refining Corp (PASAR), South Korea's LG Metals, Mitsui & Co Ltd and the Japanese smelter pool of seven smelting companies.