AusRAIL, Market Sectors

Cyclone season hits WA resources revenue

<p>Western Australia’s cyclone season could have cost two of the state’s resource companies up to $1.1bn in collective lost earnings.</p> <p>Fortescue Metals Group said that three cyclones over a three-week period in the March quarter &#8211 including George, which killed two Fortescue rail construction workers south of Port Hedland &#8211 had forced the group to delay the start of iron ore shipments by six weeks.</p> <p>Fortescue’s first shipment is now due in May, rather than March, resulting in lost production and sales estimated at more than $800m.</p> <p>The cost of Fortescue’s $3bn project has risen by $106m and will now produce 9m tonnes less than originally planned in 2008. </p> <p>Fortescue had hoped to reach 34mtpa next year before ramping up to a full capacity of 45mtpa in 2009.</p> <p>It will now look to export 25mtpa, which still makes it Australia’s third largest iron ore exporter behind BHP Billiton and Rio Tinto.</p> <p>Meanwhile, Woodside Petroleum said the cyclones had caused a 5% fall in liquefied natural gas (LNG) production during the March quarter.</p> <p>The gas giant produced 18m barrels of oil equivalent during the quarter, contributing to $899m in revenue.</p> <p>Production from the North West Shelf Venture was down by 16% to 36,000 tonnes.</p> <p>The revenue figure is down from about $1.1bn last quarter, but the company attributed this to lower commodity prices and lower sales.</p> <p>Woodside is still assessing the timing of its joint-funded Browse and Sunrise developments.</p> <p>Browse is expected to cost more than the $15bn Chevron is estimated to be paying for its Gorgon LNG project.</p> <p>Environmental groups have expressed concern about damage to reefs around Browse, 425 km off the coast of Broome. </p> <br />