Australia: WA gas blast rocks miners

MINERS are taking desperate measures to secure supplies of gas and diesel fuel in the face of at least two months of interruption to 30% of gas supplies in Western Australia following the explosion at Apache Energy’s facility on Varanus Island.

A Citi analyst, Clarke Wilkins, told clients that he had heard reports of spot gas sales in WA at up to $30 a gigajoule, triple recent spot prices and five times the price of contracted gas.


The price of diesel has hit a record high of $US145 a tonne due to a global shortage of refinery capacity.

“The impact of the gas disruptions in WA will increase earnings risk for a number of stocks going into the reporting season, and we therefore remain cautious on the near-term prospects for the sector,” Mr Wilkins said.

Newcrest Mining’s flagship Telfer mine in the Pilbara is one of the operations most affected by the shortage. Its gas is piped directly from the Varanus facility, as opposed to a grid feed, and the miner has only limited supplies of diesel at the remote site.

Credit Suisse said the company might have a week or two of crushed ore stockpiles, but production disruptions were likely if the problem persisted.

The Age