Qld floods paralyse $38B coal industry

PEABODY Energy and Wesfarmers have joined Anglo American Metallurgical Coal and Rio Tinto in calling force majeure on coal export contracts as the floods in Queensland continue to take their toll, resulting in billions of dollars of lost exports.
Qld floods paralyse $38B coal industry Qld floods paralyse $38B coal industry Qld floods paralyse $38B coal industry Qld floods paralyse $38B coal industry Qld floods paralyse $38B coal industry

Moranbah North stockpiles, courtesy Anglo Coal.

Lou Caruana

Emerging producer Cockatoo Coal has also been hit by the deluge, revealing yesterday that a bund wall has been breached at its Baralaba mine in the Bowen Basin as Queensland's $38 billion coal sector bows under the pressure of the worst flood conditions in 50 years.

Anglo’s affected mines are Callide, Dawson, Foxleigh, German Creek and Moranbah North.

“The nature and extent of rain impacts on Anglo American's Queensland operations are currently being assessed,” the company said in a statement.

“The full impact is not clear as rain continues to fall, with further rain forecast for the region.

“While we are focused on reducing the impact on production, the safety of our people remains our number one priority.”

Revenue from Peabody's Australian operation accounted for 39% of the company’s total production in the third quarter, climbing 36% during the period.

Rio Tinto announced earlier that it would declare force majeure on coal contracts from its Kestrel, Hail Creek, Blair Athol and Clermont mines.

At Wesfarmers’ Curragh mine, access roads via the Capricorn Highway to Blackwater have been closed, which has prevented a number of employees from returning to work following the Christmas public holidays. The local access road from Blackwater to the Curragh mine remains open.

A major flood surge in the Mackenzie River adjacent to the Curragh North mining area is expected to peak on Sunday, January 2. External forecasts indicate that this event will exceed the magnitude of the flood peak of January 2008.

“Flood waters from the Mackenzie River continue to be contained by the levee protecting mining operations at Curragh North,” Wesfarmers said.

“All mining operations at Curragh North have been suspended, including the Curragh North conveyor, and draglines 301 and 304 have been relocated to higher ground. Limited dragline operations are continuing in the Curragh mining area.”

The company is flying selected employees in from Rockhampton to support the limited operations and for flood surge preparation works at Curragh North.

Queensland Rail has suspended train operations on the Blackwater line. The force majeure notice previously issued by Wesfarmers for coal deliveries remains in place.

Wesfarmers Resources managing director Stewart Butel said he was confident the Curragh North levee system, which was designed to accommodate a one in 1000-year flood event, and other preventative measures would protect Curragh and the Curragh North operations from the predicted major flood surge and further rain.

The exact cause of the pit flooding at Cockatoo’s Baralaba is not fully understood as access has been impossible due to the bad weather and regional flood water equivalent to the one in 100-year flood design levels. There is also a lack of suitable aircraft to enable access or a flyover, Cockatoo said in a statement.

“While the full extent of the impact of the flood on the mine open pit is yet to be determined, once flood waters recede a detailed pit dewatering program will be initiated to get the mine back into production as soon as possible,” it said.

“Mine management are making the appropriate plans to ensure the required equipment will be available to restart the operations once the flooding has abated and remedial works have been completed. All offices, workshop and coal process equipment remain undamaged and on high ground.”

The Baralaba pulverised coal injection coal and thermal mine is targeting 750,000 tonnes per annum of raw coal production in the 2011-12 financial year.

Under conceptual plans to expand the Bowen Basin open cut operation by bringing the Baralaba North and Wonbindi projects into production, 3 million tonnes per annum of raw coal output will be targeted.

The Baralaba mine reached 550,000t run-of-mine output for the recent financial year. PCI coal sales were 240,000t while thermal coal sales totalled 330,000t.

Queensland Resources Council chief executive Michael Roche said it was likely that lost coal and gas production would run up to hundreds of millions of dollars but it was a situation that would be rectified over time.

About $100 million of coal a day is exported from Queensland’s ports but there has been a delay getting coal to the Dalrymple Bay coal terminal because of a derailment on QR National’s Goonyella rail line on Christmas Eve. The line is expected to reopen on Saturday with 43 ships waiting off the coast ready to load.

The only operating port at the moment is the Gladstone RG Tanna coal terminal.