(Fixes link to coal mine disruption factbox)
* Gov't forecasts 20pct of Australia's quarterly coal
exports lost to floods
* Around 7 pct of cotton plantings also lost
* Cockatoo, Aquila make headway at coal mines leave force
majeure in place
(Wraps ABARES data, Rio Tinto, Aquila)
By James Regan
SYDNEY, Jan 21 Australia's devastating floods,
which shut mines and damaged rail lines, could cut coal exports
by around 15 million tonnes, or 20 percent this quarter, even as
collieries show signs of recovery, the government's commodities
forecasting agency said on Friday.
Coal ports in hardest-hit Queensland state escaped severe
damage, but are still operating well under capacity as a result
of lower coal receivals, Australian Bureau of Agricultural and
Resource Economics and Sciences (ABARES) said.
ABARES estimates flooding due to monsoon rains that started
in November could lower coal export earnings by A$2.0 - $2.5
billion ($1.97-billion-2.47 billion) during the quarter to March
"Coal production at affected mines has been reduced because
of a number of factors, including flooded pits and difficulties
in removing the water, and a lack of access to mine sites
because of flooded roads," it said.
Australia was forecast to export 160 million tonnes of
metallurgical coal and 158 million tonnes of thermal coal in
fiscal 2011, according to ABARES.
Cockatoo Coal and Aquila Resources on
Friday partially resumed operations in hardest Queensland state
as floodwaters continued to recede.
But in the aftermath of one of Australia's worst natural
disasters on record, mining companies say operations are still
far from normal: Vital rail corridors linking mines with export
terminals are only slowing being reactivated and force majeure
-- a legal let-out enabling miners to break sales contracts
without penalty -- remain in place across Queensland.
Aquila, which mines 2.8 million tonnes a year of
metallurgical and thermal coals from its Issac Plains mine in
50-50 partnership with Brazil's Vale warned it would
still take some time to resume full operations. Cockatoo Coal
said mining at its Baralaba operations would not start
The Baralaba mine suffered some of the worst damage during
the flooding after a levy protecting the lode collapsed sending
a torrent of water into the pit.
Flooding at other mines -- most concentrated in the inland
Bowen Basin -- was restricted to rainwater.
"Whilst all equipment is in working order, resumption of
full production rates will take some time while dewatering of
the site is completed, Cockatoo said.
It only expects to restart mining in February once pit
dewatering provides improved access.
"A phased program of dewatering/mining is then expected to
continue for several weeks as the mine returns to planned
production capacity (about 150,000 tonnes per quarter),"
Suppliers of pumping equipment needed to empty water from
the mines have said they will be hard-pressed to meet demand and
environmentalists are concerned the water may pose health
The flooding has been blamed on rains triggered by a La
Nina Pacific weather pattern that has devastated huge areas of
the eastern seaboard.
Rio Tinto RIO.L> this week said its Queensland coal
mines were operational but still constrained and left its force
majeure declaration in place. .
BHP Billiton , the world's largest supplier
of sea-borne hard coking coal via a joint venture with Japan's
Mitsubishi Corp , is bracing for lower production over
the next six months in the aftermath of the flooding, which
trimmed December quarter output by a third.
The flooding has driven contract prices for coking coal as
high as $225 per tonne for the first quarter of 2011, compared
to $209 per tonne in the fourth quarter of 2010.
Spot prices have shot up to more than $350 per tonne and
consultants Wood Mackenzie said prices could reach $500.
This will mean higher second-quarter contract prices, based
on average daily spot prices over the previous three months.
But a quicker-than-expected return to production would
likely end the upward trajectory in coal prices, according to
Patersons Securities analyst Andrew Harrington.
"This happened after flooding in 2007/08 caused the price to
go up and then fall back," Harrington said.
WHEAT QUALITY DOWN, COTTON HIT
ABARES also estimated flooding cut agricultural production
by at least A$500 million to A$600 million in 2010/11.
It said the winter harvest, including wheat, barley and
canola, in most of the flood-affected regions was either
complete or near completion before the recent flooding.
But a wet harvest means Australia, usually the world's
fourth biggest wheat exporter, could see more than 10 million
tonnes of wheat downgraded in quality to low quality milling
wheat or feed wheat. A wet growing season means a near record 26
million tonnes of the grain could be harvested nationally.
ABARES also estimated that around seven percent of
Australian cotton plantings, valued at A$150 million in 2010-11
was destroyed and a further 2 percent were at risk if the crops
did not have the opportunity to dry out.
The 2010/11 Australian cotton harvest could be 3.95 million
bales, 8 percent below an earlier estimate but the July to June
year harvest would still be a record, exceeding the 3.52 million
bales harvested in 2001/02, Rabobank said in a report last week.
(4.4 bales equals 1 tone)
The wet weather in Queensland has had a limited impact on
other mineral and energy commodity production concentred further
north of the coalfields
The one notable exception was Rio Tinto declaring force
majeure at its Boyne Island aluminium smelter.
Force majeure was lifted on Friday after road and rail
access to the port of Brisbane was restored .
(Additional reporting by Bruce Hextall and Balazs Koranyi;
Editing by Ed Davies)