Coal output tipped to be reduced

HEAVY rain from Cyclone Debbie could curb the output of coal used to make steel and potentially dent economic growth.

Production at several mines in central Queensland’s Bowen Basin, which supplies 60 per cent of the world’s coking coal exports were been lowered or completely halted as the powerful storm lashed the area.

Glencore’s Collinsvale and Newlands mines and BHP Billiton’s South Walker Mine were among those where production was temporarily sus- pended. Rail operator Aurizon also suspended coal services and stowed trains on the Goonyella and Newlands systems, while the Abbot Point, Hay Point and Dalrymple Bay ports were locked down.

National Australia Bank senior economist Gerard Burg said the cyclone could damage infrastructure and slow coking coal exports, but the major risk to coking coal supply was flooding of mines.

“What potentially might be the bigger problem is if the system brings heavy rain into the Bowen Basin,” he said.

Commonwealth Bank mining and energy commodities analyst Vivek Dhar said many mines were flooded when Queensland was hit by Cyclone Yasi in February 2011. Coal production fell 22 per cent in the March quarter of 2011, which led to prices spiking 40 per cent, he said.

The impact of Cyclone Yasi and floods on exports, particularly coal, caused the economy to shrink 1.2 per cent in the March quarter of 2011.

Mr Dhar said the impact was long lasting and mine damage long lasting.