Thu, Dec 30, 2010 - Page 10 News List

QR says heavy rain hurting coal exports

‘FORCE MAJEURE’:Parts of Australia are expected to have higher-than-average rainfall in the coming months, threatening an export industry worth US$33.4 billion


An aerial view shows flooding in Rockhampton, Queensland, Australia, on Dec. 14, 2010. Record rain and floods in northeastern Australia are disrupting coal output from QR National, Xstrata PLC and Rio Tinto Group mines.


QR National Ltd, Australia’s largest coal transporter by rail, expects deliveries to be “adversely” affected for at least this month and next after rain and a derailment forced track closures in Queensland.

The wet weather and flooding is “hampering access to the track and hence recovery efforts,” Brisbane-based QR said in a statement yesterday.

Australia had its wettest September-to-November period on record, prompting mining companies including Xstrata PLC and Vale SA to declare force majeure. Force majeure is a legal clause that allows a company to miss deliveries because of circumstances beyond its control. Rio Tinto Group, the world’s third-largest mining company, yesterday also made the declaration.

“The severe monsoonal rain, on top of the significant rainfalls in November and December, has had an adverse impact on mining operations and has cut access roads and rail networks,” London-based Rio said in a statement to the -Australian stock exchange.

It couldn’t provide a forecast for how much coal sales may be cut, it said.

Xstrata’s Oaky Creek mine reported a spill of mine water on Monday, according to a statement from the Queensland Ministry of Climate Change and Sustainability, while BHP Billiton Ltd, the world’s largest mining company, will report any significant impact on its coal mines in the region in its next quarterly production report, BHP spokeswoman Kelly Quirke said on Tuesday.

QR’s Goonyella rail network, serving Hay Point, about 1,000km north of Brisbane, is closed after the derailment of a Pacific National train on Friday. Services may resume “within the next few days,” QR said.

Rio’s Hail Creek, Blair Athol and Clermont operations in the Bowen Basin are serviced by the Goonyella network, according to QR’s Web site. Rio has declared force majeure at those mines along with the Kestrel operation.

Heavy rain and flooding is -forecast for the “coming days,” QR said.

Australia’s Bureau of Meteorology says southeastern Queensland and eastern New South Wales have a 60 percent to 70 percent chance of getting higher-than-average rainfalls between next month and March.

Australia accounts for almost two-thirds of the global coking coal trade. The forecast for more rain threatens further gridlock in an industry estimated to earn A$33 billion (US$33.4 billion) in exports next year.

Flooding in October in Queensland contributed to a 2 percent decline in the nation’s coal and other non-farm exports, said Spiros Papadopoulos, a senior economist at National Australia Bank Ltd in Melbourne.

With the latest damage and transportation disruptions, “there is likely to be a larger negative impact on our mining and resource exports in December,” he said.

The damage may cut Australia’s economic output by 0.5 percent, or A$6 billion, as farming and mining exports are curtailed, the Australian newspaper reported today, citing AMP Ltd chief economist Shane Oliver.

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