RPT-WRAPUP 2-Australia floods hit consumers, coal sector on mend

Wed Jan 19, 2011 3:45am EST

 (Repeats to add byline)	
 * Coal export ports show signs of returning to normal
 * Consumer confidence drops over 5 pct in Jan.
 * Coal industry recovery still seen taking months

 (Updates with QR National comment)	
 By Rebekah Kebede and Ian Chua	
 PERTH/SYDNEY, Jan 19 (Reuters) - Coal export terminals
showed signs of recovery on Wednesday as Australia began a
clean-up process from massive flood damages that could take
months and has undermined consumer confidence in the $1.3
trillion economy highly dependent on commodity exports.   	
 Flooding blamed on rains triggered by a La Nina Pacific
weather pattern has devastated huge areas of the eastern
seaboard, killing 25 people and causing thousands to be
evacuated, while destroying crops and crippling Australia's A$50
billion coal industry and causing coal price spikes.	
 Risks also remain for more wild weather. Australia's weather
bureau issued weather warnings on Wednesday for areas of
southeast and south central Queensland, including Gladstone, the
location of one of the state's major coal export terminals.	
 "Severe thunderstorms are likely to produce damaging winds,
very heavy rainfall and flash flooding," the bureau said.	
 In a sign of some improvements, Queensland's coal mines are
now operating at full permanent staffing levels, coal rail
systems are back up and running and the state's two largest coal
export terminals said shipments were set to increase as coal
rail haulage lines and mines return to normal. 	
 "With the Moura rail line open and the Dawson, Callide and
Boundary Hill mines railing coal, the port of Gladstone can now
start ramping up export capacity," Gladstone Ports Corporation
Chief Executive Leo Zussino said in a statement. 	
 But there were signs that the coal industry will only make a
slow comeback, with Gladstone Port, Queensland's second largest
coal export port, saying it would take until the end of March
for exports to return to normal. 	
  	
 Australia's consumer sentiment has also taken a hit as
wall-to-wall media coverage of the floods raised anxieties.	
 Consumer sentiment fell 5.7 percent in January, the biggest
fall in about six months, according to a Westpac-Melbourne
Institute report. 	
 "There is no doubt that the sharp slide in consumer
sentiment is almost wholly due to the flood disaster across the
nation," Savanth Sebastian, an economist at Commonwealth
Securities in Sydney said in a note.	
 Australia, the world's largest coal exporter, accounts for
about two-thirds of global coking coal trade, with around 90
percent of that coming from Queensland state. Coking or
metallurgical coal is used for steelmaking. 	
 The Queensland Resources Council has estimated that only 15
percent of the 57 coal mines are fully operational, 60 percent
are operating under restrictions and another 25 percent have yet
to restart production. Damage to the industry is estimated at
A$2.3 billion.        	
 Global miners Rio Tinto  , BHP Billiton
  and Xstrata are among major companies
involved in coal mining in Queensland.       	
 Australian coal-to-retail conglomerate Wesfarmers 
expects flooding in Queensland state to significantly reduce
output at its Curragh coal mine, the firm said on Wednesday.  	
 Wesfarmers was one of several companies to declare force
majeure after extensive rains in December and January shut most
of the region's coal mines. 	
 With many mines inundated with floodwaters, Queensland has
granted temporary permission to 20 coal mines to pump out excess
floodwater and is considering applications from another 16
mines, the state's Department of Environmental and Resource
Management said Tuesday. 	
 QR National said on Wednesday that it was
re-opening its flood-hit Blackwater coal haulage line which was
shut after a Christmas week deluge late last year, allowing
those mines that are producing coal to rail it out for
export. 	
     	
 FLOOD MISERY	
 The Australian Industry Group, a business lobby, said the
wild summer weather, and a rebuilding estimated to last years
and to cost between A$5 billion-A$20 billion, should now prompt
the government to rethink a planned 2012-13 return to budget
surplus.	
 "We can try and get into surplus by a few dollars in 2013,
or we can do what's required now, in the next 12 months, to try
and help businesses, and preserve jobs," AIG Chief Executive
Heather Ridout told Australian radio.	
 Prime Minister Julia Gillard told reporters in Brisbane that
the government would both rebuild and retain the surplus target.	
 The construction industry said it was still counting the
cost of rebuilding.	
 "You're more than a month off having an accurate number. 
They just literally need to be able to visually inspect hundreds
of kilometres of tracks, test rails and bridges,..and inspect
buildings," said Peter Barda, executive director of the
Australian Construction Industry Forum.	
 "The other great unknown will be not just the scope of the
work but the prices. There will be skills shortages, materials
shortages, so its likely prices will be higher," he said,
declining to give any ballpark figure.	
 The flood misery went on in some areas and thousands of
people in the Victorian town of Kerang were forced overnight to
flee across the state border into New South Wales, also hard hit
by flooding, after a major levee bank sprung a leak.	
 Dozens of cities and towns across Victoria remain under
threat from flooding in the wake of record rainfall last week,
with residents at Warracknabeal also concerned about the
strength of protective levees on Yarriambiack Creek.	
 In Queensland, residents in the rural city of Toowoomba,
which was hit by devastating flash floods last week, buried a
mother and son on Wednesday. The two had been swept from the
roof of their car in the central business district when their
rescue rope snapped.	
	
 (Additional reporting by Rob Taylor in CANBERRA and Sonali Paul
in Melbourne; Editing by Ed Davies)