Congested ports in Brazil and Australia are adding to world number one resources group BHP Billiton’s operating costs, executives at BHP Billiton’s carbon steel materials division said in a conference call on Thursday.
BHP Billiton’s carbon stainless materials division holds the group’s interests in iron ore, manganese ore, manganese alloys, metallurgical coal and hot briquetted iron.
Due to China’s very strong demand for bulk commodities such as iron ore, manganese and alumina, global freight rocketed in 2003 and remains extremely high in 2004.
Higher rates for freight and demurrage as well as an increased amount of demurrage are adding to BHP Billiton’s cost base, but the group’s executives weren’t able to quantify the amount. Demurrage is the charge paid as compensation for the delay of a ship beyond its scheduled time of departure.
There are large queues of ships at the ports where BHP Billiton loads iron ore in western Australia as well as Brazil and at the ports where the group loads coal in Queensland, Australia.
The effect of the extra shipping costs will have an impact on the group’s 2004 financial year to June 2004, but the group’s 2005 financial year to June 2005 will most likely see less of an impact from freight and demurrage. – I-Net Bridge