BHP expects derailed train to have some impact on its Australian iron ore exports

By Melanie Burton

MELBOURNE (Reuters) - Mining giant BHP Billiton expects some interruption to its Australian iron ore exports after a nearly 3-km-long train loaded with the commodity was forcibly derailed this week after running away en route to a key shipping hub.

The company said in a statement on Wednesday that its reserves of iron ore at the Port Hedland hub were not expected to cover the entire period of disruption following the incident, and that it would be liaising with its customers about its contractual commitments over that time.

The derailment came after the train ran away at high speed for nearly 100 km (62 miles) when the driver left the cabin for an inspection. Nobody was injured in the incident, which happened in a remote area around 120 km south of the world's largest iron ore loading terminal in the country's northwest.

The miner said its normal train operations remain suspended, estimating that around 1.5 km of train track were damaged. Its mine sites continue to operate and it expects a partial resumption of rail operations in about a week.

"Recovery operations are underway. We cannot speculate on the outcome of the investigation," BHP said.

"However, we are working with the appropriate authorities and our focus remains on the safe recovery of our operations."

Footage aired by a local television station showed a wrecked locomotive beside a chain of upturned wagons in the country's Outback bushland.

The wreckage is expected to be removed over the next few days with track repairs beginning around the same time, BHP said.

Analysts said they expected BHP to be able to claw back any shipment delays and that the impact to operations was unlikely to be significant.

"Investors are keeping one eye on the developments in the Pilbara after BHP announced it had halted all rail operations," ANZ bank said in a report.

Australia's Transport Safety Bureau said on Monday that a probe into the incident was underway. It is expected to release a report in the second quarter of 2019.

There has been no disruption so far to shipments of BHP's medium-grade iron ore cargoes to top market China, traders said.

"I don't think any disruption would matter as demand is now focused on low-grade iron ore," said an iron ore trader in Singapore.

(Reporting by Melanie Burton; Additional reporting by Manolo Serapio in Manila; Editing by Joseph Radford; Editing by Joseph Radford)