UPDATE 4-Australia's Dalrymple coal stocks up but could face depletion

Wed Jan 5, 2011 5:23am EST

 * Coal stockpile triple at Australia's Dalrymple port
 * Uncertain if mines will resume production soon
 * Macarthur shipping again, force majeure still stands

 (Adds map of Queensland mines, recasts)	
 By James Regan and Rebekah Kebede	
 SYDNEY/PERTH, Jan 5 (Reuters) - Australia's largest coal 
export terminal, Dalrymple Bay, had coal inventories of around 
700,000 tonnes on Wednesday, about three times up from last 
week as receding floodwaters allowed more rail lines from 
Queensland collieries to operate.	
 But logistical problems caused by floods in Australia's 
largest coal producing state persist, with some lines hauling 
coal from Outback mines expected to remain at least partially 
underwater for another week -- longer if the rains return.	
 The worst flooding in decades has affected an area the 
size of Germany and France and created an archipelago of towns 
amid a muddy inland sea.	
 Analysts are forecasting higher coal prices in months to 
come as coal users scramble to find supplies elsewhere.	
 
 Port officials at Dalrymple Bay are also worried that coal 
stocks will drop again if mines are unable to resume 
production soon. An extended period without coal production 
would lead stockpiles at mine sites to run out, bringing much 
of Australia's coal export industry to a halt.	
 Seventy-five per cent of Queensland's mines are currently 
not operating because of flooding, according to Queensland 
state premier Anna Bligh.	
 At least 46 mines representing about 80 percent of 
Australia's total metallurgical coal exports alone have likely 
been affected by the torrential rains, either directly as 
rains and flooding slow or halt production or due to rail 
disruptions, Ben Willacy, an analyst with Wood Mackenzie in 
Sydney, said.	
 Over one month this would result in 14 million tonnes of 
lost coal production, Willacy said.	
 Since early December coal miners have been invoking force 
majeure declarations to protect themselves against lawsuits 
for cancelled export contracts.	
 Still the floods may not have an impact on Australia's 
total coal production this year as long as mining companies 
can make up for lost time once operations return to normal, 
according to Willacy.	
 	
 SIGNS OF RECOVERY	
 Macarthur Coal , the worlds largest producer of 
seaborne low volatile pulverised injection coal, has resumed 
shipments to the port after the key Goonyella rail corridor 
reopened, but also warned future shipments will depend on the 
availability of coal.	
 The company said its force majeure declaration on Dec. 3 
remained in place due to the heavy rains, which last week 
swamped the Bowen Basin colliery district and flooded mines.	
 "Once the pits are free of water, we'll have more coal 
exposed that can be processed and transported, but it is not 
possible to predict when we will return to a steady state of 
mining as that largely depends on any future rain," Macarthur 
managing director Nicole Hollows said. 	
 In Australia, like most everywhere in the world, coal is 
shipped along rail corridors to export ports. 	
 Although QR National has re-opened its Goonyella 
and Moura rail lines, the company said Wednesday that it 
expected parts of its Blackwater coal rail system to remain 
flooded for another week. [ID:nL3E7C5026]	
 Last week, Dalrymple, which mostly loads ships bound for 
Asian steel mills with metallurgical coal, was holding only 
about 200,000 tonnes of coal against an ideal stockpile of 1.2 
million tonnes.	
 The port was now receiving about 230,000 tonnes of coal a 
day, or some 23 trainloads, slightly below the maximum it can 
handle, according to the port spokesman.	
 "My concern is that I think we are drawing down from mine 
stockpiles. Once we exhaust those stockpiles we will get an 
indication of just how severe the mine production issues are," 
he said.	
 Two of the largest coal mines, Rio Tinto's 
 Blair Athol mine and Xstrata's Oaky Creek 
mine, were each holding about 600,000 tonnes of coal in 
stockpiles, while AngloAmerican's German Creek mine 
holds about 700,000 tonnes, according to Dalrymple Bay's 
spokesman.	
 "If we are drawing down 200,000 tonnes-plus per day, it's 
not going to take long to draw down those stocks," he said.	
 "These mine areas are going to be affected for months to 
come," said Jess Carey, a flood forecaster for the Australian 
Bureau of Meteorology.	
 "In terms of river levels, they might recede by next week 
but these big mining establishments are obviously going to 
feel the effects for months to come," Carey said.	
 Despite the bad weather, Macarthur said, coal sales for 
the six months to Dec. 31 were 2.4 million tonnes, in line 
with guidance provided to the market in mid-December.	
 But Macarthur also said net profit after tax for the first 
half of the 2011 financial year would be at the lower end of  
its Dec. 16 guidance of between A$97 million and A$102 million.	
 Analysts are forecasting spot metallurgical coal prices 
are set to move sharply higher as Asia's steel mills scour the 
globe for new suppliers to cover production lost to Australian 
floods.	
 Spot prices for coking coal are hovering around $250 a 
tonne, according to coal analysts and traders, more than 10 
percent over the industry benchmark of $225 a tonne, free on 
board, negotiated between BHP Billiton  and 
Japanese steelmakers for the first quarter of 2011.  	
Pressure to find coal elsewhere is now expected to lift 
spot prices close to $300 a tonne in the next few weeks, a  
level last seen when Australian collieries flooded in 2008 	
 Australia's 159 million tonnes of coking coal exports -- 
the majority mined in Queensland -- in 2010 accounted for 
nearly two thirds of global shipments, according to 
preliminary government figures.   	
 Although the state's coal operations have been heavily 
impacted, Queensland's nascent coal seam gas industry has been 
minimally impacted, according to BG Group , Santos 
 and Origin Energy , who all operate coal seam 
gas wells in the area.	
	
 (Additional reporting by Amy Pyett; Editing by Michael 
Urquhart)	
 
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