Australian mining giant BHP Group BHP.AX said on Thursday that the Red Sea disruptions are forcing some of its freight service providers to take alternative routes, such as Africa’s Cape of Good Hope, while others still prefer the Red Sea with additional controls.
“The Red Sea is one of the key shipping routes in the world, however, the majority of BHP’s shipments do not go through this route,” and there have been no major business disruptions so far, the world’s largest listed miner said in a statement.
The move follows reports from companies such as oil major BP BP.L and Shell SHEL.L that have paused transits through the Red Sea as strikes on commercial vessels by the Iran-aligned Houthis have stymied trade between Europe and Asia.
Some shipping companies have instructed vessels to reroute via a slower and more expensive Cape of Good Hope.
Some 320 million tons of bulk commodities sail through the Suez Canal and through the Red Sea, accounting for 7% of global dry bulk trade, Gerard Ang, BHP’s head of maritime iron ore, said at an industry conference in Singapore earlier on Thursday.
In the short term, this could lead to a squeeze in tonnage supply in the North Atlantic market which translates to a more volatile, dry bulk market for shipping, Ang added.
The Wall Street Journal earlier reported that BHP is diverting almost all of its shipments from Asia to Europe away from the Red Sea.
The miner, with operations spread across Australia, Chile, Brazil, the U.S. and Canada, primarily produces copper, iron ore and metallurgical coal. It generated $1.96 billion in revenue from Europe in 2023, around 3.6% of its total revenue of $53.82 billion.
“From a long-term perspective, we don’t really see a big profound impact on the trade,” Ang said.