SYDNEY/PERTH Feb 1 Heavy rains in Australia's
eastern Queensland state have caused two major coking coal
producers, Rio Tinto and Xstrata, to
declare force majeure on exports this week after a rail haul
line was shut last week due to flooding.
Torrential rains and flooding in the state, which produces
about half of the world's coking coal, used for making steel,
have cut rail haulage lines and other infrastructure and shut
mines and ports.
Aurizon Holdings, which owns the rail lines that
connect many of Queensland's mines with export ports, has had
two major rail haulage lines shut since last week due to
flooding, but expects them back online next week.
The wet weather is still a long way from causing the level
of havoc seen in 2011, when many mines were inundated with water
and took months to come back to full production, coal industry
"Export losses to date are less than one million tonnes of
metallurgical coal products - easily recoverable during the
course of 2013," UBS analyst Tom Price said.
UBS estimates that around 10 million tonnes of coal
production was lost as a result of the 2011 floods.
Both Rio Tinto and Xstrata said their force majeures were
due to problems with the rail lines rather than with operations
at the mine sites.
Force majeure is a legal clause relieving companies of
immediate supply obligations to honour sales contracts due to
circumstances beyond their control.
Only one of Rio's mines, Kestrel, which produces around four
million tonnes of coking and thermal coal per year, is affected
by the rail outage, the company said. Xstrata did not specify
how many of its mines were affected by the outage.
Some analysts warned that the cyclone season, which begins
on Nov. 1 and ends on April 30, could still disrupt the coal
"Any deterioration in weather conditions in coming weeks may
prompt a cut to Australia's supply forecasts," Price said.
UBS' current forecast for Australia's coking coal exports,
one of the country's top export earners, is 151 million tonnes
Torrential rains and flooding in 2011 caused several miners
to declare force majeure on exports and sent coking coal prices
to record highs near $350 per tonne.
Several major coal producers including BHP Billiton
, Anglo American and Peabody Energy,
also have operations in the area, but have not declared force
majeures as a result of the rains.