Storm’s fallout a threat to coal

HEAVY rain from ex- Cyclone Debbie has sparked fears of a major disruption to the output of coal used to make steel, potentially damaging Australia’s economic growth.

Production at mines in central Queensland’s Bowen Basin, which supplies 60 per cent of the world’s coking coal exports, has halted as rain continues to fall across the region.

Glencore’s Collinsville and Newlands mines and the majority of the BHP Billiton group’s nine mines and its Hay Point coal terminal are among sites where operations have been suspended.

There is speculation disruption will cost the industry hundreds of millions dollars, although coal companies and the Queensland Resources Council say it is too early to assess the impacts. The nature of the slow- moving system and heavy rain has delayed attempts to inspect sites.

It is likely coking coal prices will soar, while any damage to rail links could halt exports for months.

A Queensland Resources Council spokeswoman said it was likely the Bowen Basin would see three to five days of torrential rain.

“It is not until that rain has fallen and the resulting flood patterns are known that any operational impacts will be apparent,” she said.

The spokeswoman said the industry’s priority was the safety of its people, many of whom were at home to help their families and communities.

A BHP Billiton spokesman said mining was temporarily suspended at its Bowen Basin operations with minimal personnel on site for security and essential systems monitoring.

Of its mines, only the Blackwater Mine, which is furthest south and inland from the storm zone, is operating.

Rail operator Aurizon has suspended coal services and stowed trains on the Goonyella and Newlands systems, while the Abbot Point and Dalrymple Bay ports have also been locked down.

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.

“Looking at the tracking map of Cyclone Debbie it seems to be heading in a similar direction,” Mr Dhar said.