Arrium Faces A$40M Steelworks Hit After Electricity Blackout

  • BHP’s mammoth Olympic Dam copper mine also remains offline
  • Large industrial companies remain without power: ElectraNet

Australian steel and iron ore producer Arrium Ltd. may face costs of as much as A$40 million ($30.6 million) following storms that caused blackouts and forced BHP Billiton Ltd. to halt its Olympic Dam copper operation.

Arrium’s steelworks in the south-coast town of Whyalla and the mining of iron ore to feed the mill have been halted since the power failure on Sept. 28. Arrium, which went into administration in April, faces costs of about A$4 million a day, with operations potentially not being restored for as many as 10 days, a spokesman for administrators KordaMentha said Sunday. Daily production of 3,500 tons of steel has been halted from Whyalla since storms caused damage and flooding across South Australia state, including its capital city Adelaide.

BHP’s Olympic Dam, the world’s fifth-biggest copper deposit, remains shut with no timeline yet confirmed for production to be restored, a BHP spokesman said Sunday. The Prominent Hill gold and copper mine, owned by OZ Minerals Ltd., also remains offline. Essential services and the open-pit mine are operating, but both the processing plant and underground mine remain shut, a spokesman confirmed Sunday.

Lead Smelter

Nyrstar NV said Thursday that disruption to its Port Pirie operation -- among the world’s biggest lead smelters -- could trim as much as 5 million euros ($5.6 million) from profits. Nyrstar expects to take a blast furnace at its 127-year-old smelter offline for as long as 14 days after the power cut.

Transmission company ElectraNet said “some large industrial” companies remained without full power on Sunday. “Power supply from the mid-north of the state, around to Port Augusta, and down the Eyre Peninsula, is currently relying on the one undamaged circuit,” said Simon Emms, ElectraNet network services manager. "If all goes well and things like weather, site access or soil conditions don’t slow or stop us, we hope to have one of the damaged circuits back up and energized, by the end of next weekend. Another circuit should then follow, a couple of days later.”

Australia’s Prime Minister Malcolm Turnbull stepped up his government’s attack on renewable energy Thursday by seizing on the blackout in South Australia, the state that’s most reliant on wind and solar generation, as a risk to energy security.

Federal Environment and Energy Minister Josh Frydenberg said he would hold a meeting Oct. 7 of energy ministers to discuss lessons from the blackout and whether high renewable targets within some states were appropriate given supply risks.

“The Australian Energy Market Operator has pointed out as recently as August this year that, if the inter-connectors between South Australian and Victoria went down, because of the high reliance on intermittent supply, namely wind and solar, there would be in their words, a high likelihood of a full regional blackout,” he told Sky News Sunday.

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