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REFILE-WRAPUP 1-Australia govt: 20 pct of qtr coal exports lost to floods
January 21, 2011 / 7:35 AM / 7 years ago

REFILE-WRAPUP 1-Australia govt: 20 pct of qtr coal exports lost to floods

(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 (Reuters) - 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 31.

“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 before February.

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),” Cockatoo said.

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 risks.

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.


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)

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