Heavy Rains, Floods Disrupt Australia Coal Mining, Port, Freight Operations

By Rebekah Kebede | December 29, 2010

Heavy rains and flooding in Australia’s key coal-producing Queensland state have impacted mining operations and brought parts of the coal infrastructure, including rail and ports, to a standstill, operators said on Wednesday.

Dalrymple Bay Coal terminal and Gladstone Ports, two of Australia’s biggest coal export terminals, and rail firm QR National , the nation’s top coal transporter, said they were forced to cut back operations due to weather-related disruptions.

Rio Tinto joined several other companies in declaring force majeure on some coal sales contracts on Wednesday due to the heavy rains, saying the severe monsoonal rains impacted mining operations, access to roads, and disrupted rail hauling. Rio’s shares ended down about 1 percent on Wednesday.

Production at Anglo American Metallurgical Coal, in particular its Dawson mine in Queensland state, has been disrupted by rains and flooding, which have severely restricted access to the mine.

Australia is the world’s biggest exporter of coking coal used for steel-making and accounts for about two-thirds of global trade. The nation is also the second-biggest exporter of thermal coal used for power generation after Indonesia, with about 20 percent of world exports.

The country’s unusually wet spring and early summer have already pushed both coking coal and thermal prices sharply higher and tight markets are keeping a close eye on further disruptions.

Anglo-Australian mine BHP Billiton is planning to raise the price of coking coal for Japanese steel makers by about 8 percent to $225 a ton for the January-March period from the current quarter.

Dalrymple Bay Coal terminal at the Port of Hay Point, the world’s largest coal export port with an annual capacity of 129 million tons, halted operations as stockpiles have run too low after a train derailment disrupted supplies.

Dalrymple Bay Coal, which ships mostly metallurgical coal, stopped coal shipments on Tuesday after it exhausted its coal stockpiles and aims to restart shipments after Saturday, when trains are expected to resume transporting coal.

Dalrymple Bay currently has about 200,000 tons of coal, which is unsuitable for loading, down from an ideal working stockpile of 1.2 million tons.

Gladstone Ports Corporation, which has an annual export capacity of 75 million tons, said its RG Tanna coal terminal will operate at 50 percent of capacity this week due to rail system closures after flooding and track damage.

“At present we have no trains delivering coal from the Blackwater and Moura rail systems,” Gladstone Ports Corporation Chief Executive, Craig Walker said in a statement. “All mines in the region are closed due to the latest rains,” he said, adding he expected the situation to remain the same for the next 24 hours.

QR National said it was forced to temporarily close its Goonyella coal haulage system because a Pacific National train derailment and weather-related problems will affect coal haul through at least January, as flooding was still hampering access to tracks and recovery efforts.

“QR National is continuing to assess the track conditions and the longer-term impact on tonnages and the network, however heavy rain and flooding is forecast for coming days,” the company said. “Until these highly unusual weather impacts subside, it is not possible to make a full assessment on full-year published earnings forecast,” it said in a statement.

Queensland’s torrential rains are due to a La Nina weather event, which has caused Australia’s wettest spring on record, said the nation’s weather bureau. The downpours will continue with rainfall expected to exceed the median level from December through February in southeast Queensland and northeastern New South Wales, where coal production is concentrated.

However, New South Wales’ Hunter Valley coal operations have not been impacted, with the rainfall mostly west of producing areas, a spokesman for the Hunter Valley Coal Chain Coordinator said on Wednesday.

(Additional reporting by Michael Smith, Narayanan Somasundaram, and Jim Regan in Sydney; Editing by Balazs Koranyi and Ramthan Hussain)

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