BHP declares force majeure in Queensland
BHP Billiton, the world’s biggest shipper of coking coal, said on Wednesday that it would not meet its export commitments from cyclone-struck northeast Australia, while hard running floodwaters threaten to delay repairs to rail lines.
BHP is the fourth miner in the region to declare force majeure — a clause typically invoked after natural disasters — leaving rivals in the US to cash in on a surge in prices as Chinese steel makers scramble for supplies.
Landslides at a mountain pass on the railway connecting coking coal mines in Queensland state to ports have halted operations on the busiest network, called Goonyella, which line operator Aurizon said would take about five weeks to repair.
Aurizon said its second busiest coal haulage network, Blackwater, would be operational by week’s end, but a miner that uses the line said a restart would likely be delayed due to floodwaters “running harder than predicted”.
“Our understanding is the reopening of the rail line … is likely to be early next week at best,” said the miner, who requested anonymity.
Aurizon said on Wednesday there had been no change to its schedule.
Queensland accounts for more than 50% of global seaborne coking coal supplies, with prices rising on fears that stockpiles held by steel makers will start to run down.
Chinese coking coal futures closed more than 8% higher on Wednesday to a four-month high, while Singapore-listed futures of Australian premium coking coal surged 43% over the previous two days.
ANZ Bank commodity strategist Daniel Hynes said about 13-million tonnes of coking coal from Australia would be lost due to the disruption. That would be equal to more than a fifth of China’s total imports, which reached 59-million tonnes in 2016.
“While coal producers have learnt their lesson from the devastating floods in 2011, they will struggle to recover any of the lost production,” he said.
BHP has interests in 11 coal mines in Queensland’s Bowen Basin. Nine are operated with Japan’s Mitsubishi under the BMA joint venture and two in partnership with Mitsui, called BMC.
“BHP Billiton confirms that force majeure has been declared for all BMA Coal and all BMC Coal products as a result of damage caused by Cyclone Debbie to the network infrastructure of rail track provider Aurizon,” the company said.
The Blackwater line is south of Goonyella in an area still subject to rising water levels, as floodwaters make their way through local river systems.
Levels in the main catchment, the Fitzroy River, are only forecast to peak on Thursday, even as workers try to get rail systems working again.
“We’ve been noticing a lot of those Landcruisers with the railway wheels on ’em as well, so they’ve been going up and down so I presume they’ve been checking the line,” said hotel manager Kevin Vincent, who works in the town of Duaringa on the Blackwater line.