Qld coal to pick up by next year: RBA

WEAKENED coal production in Queensland driven by severe flooding may not fully recover until next year, the Reserve Bank of Australia says, while QR National admits the wet weather contributed to a 37 million tonne reduction in coal haulage volumes over the financial year.
Qld coal to pick up by next year: RBA Qld coal to pick up by next year: RBA Qld coal to pick up by next year: RBA Qld coal to pick up by next year: RBA Qld coal to pick up by next year: RBA

 

Lauren Barrett

Speaking to the House of Representatives Standing Committee on Economics, RBA governor Glenn Stevens said the recovery of coal production in Queensland was only two-thirds complete.

While iron ore shipments had resumed normal production after tropical storms swept through Western Australia, coal production in Queensland still had a long way to go, Stevens said.

“In the case of coal, largely for environmental reasons, the process of dewatering pits is taking longer than initially expected,” he said.

The RBA predicted economic activity would be weak in the March quarter as a result of flooding and Cyclone Yasi, but expected production would make a full recovery in the middle of next year.

However, Stevens said a return to normal coal production was not likely until next year.

“It may be early next year before production has fully recovered,” Stevens said.

Meanwhile, despite QR National reporting a full year net income of $349.5 million for the 2010-11 financial year, the company was still feeling the effects of the Queensland floods and Cyclone Yasi, managing director Lance Hockridge said.

“The floods impacted heavily on Queensland coal production and many of our customers have experienced slower than expected recovery of coal supplies,” he said.

“Softer coal haulage volumes in Queensland have persisted into the first quarter, with customers continuing to report a delayed return to full production levels.”

QR National said underlying earnings before interest and tax were $367 million, up 35% compared to the same time last year.

While wet weather dampened QR National’s earnings, Hockridge attributed new coal contracts and effective cost management processes as the reason it was still able to perform well.

“The company gained momentum in its transformation program with a focus on improved revenue quality, cost management and operational efficiencies, enabling a partial offset of the impact of the reduced coal haulage,” Hockridge said.

“The company signed long-term coal contracts during the financial year for new business in excess of 26 million tonnes per annum with a total revenue value of more than $1.6 billion.”

Hockridge had an upbeat outlook for the year ahead, but expressed caution at the speed of recovery of coal haulage volumes.

“Softer coal haulage volumes in Queensland have persisted into the first quarter, with customers continuing to report a delayed return to full production levels,” he said.

“While the rate of improvement for the full year remains uncertain, as coal supplies increase over the months ahead we would expect there would be opportunities to maximise tonnages, and we have brought forward both maintenance and capital expenditure to underpin and grow throughput capability.”

QR National will spend about $1.6 billion on capital projects in the 2012 financial year to support the anticipated growth in its key markets.

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