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Australian wildfires hit BHP Group's thermal coal production

The wildfires in Australia are affecting BHP Group's production levels, with thermal coal output in New South Wales falling due to reduced air quality.

BHP Group's New South Wales Energy Coal production fell 11% to 7 million tonnes in the half ended Dec. 31, 2019, due to the impact of smoke in December 2019 and a strategy change to focus on higher-quality products, the company said Jan. 21.

Total thermal coal output was down 12% year over year to 11.73 Mt in the half, according to the company's earnings release.

The mining giant retained its annual guidance while noting that operations may be further restricted in the second half of its fiscal year if the air quality in Australia continues to decline.

Smoke from the bushfires has been reducing visibility and making it harder to operate equipment at the Mount Arthur coal site, The New York Times reported, citing a BHP Group spokesperson.

The spokesperson said some employees have been on leave to protect their properties or volunteer as firefighters. The spokesperson noted that BHP Group's energy production mix will still include coal while it assesses ways to reduce its climate impact.