But continued demand from China and India, and the earlier production shortfall from Indonesia earlier this year, will mean prices should remain well above $US100 per tonne for thermal coal, according to research by the Royal Bank of Scotland.

“The constraint to export remains back at the mines and rail systems rather than the NSW or Queensland ports, as has been the case for most of 2009,” RBS analysts said.

“This should lead to price increases in first quarter 2011 and second quarter 2011 as we expect Chinese and Indian demand to remain relatively robust.”

Exports of coal from NSW, which has been an underachiever in the coal resource export stakes, plunged from $A17.1 billion in 2008-09 to $11.2 billion in 2009-10, according to ABARE statistics.

As the state prepares for its next state election in March, the Keneally government is hoping to present a strong economic scorecard and a successful privatisation program of its electricity assets.

But the floods, which have decimated the wheat crop and are now slowing down coal exports from the Hunter Valley, should be a drag on the state’s economy.

The expected hike in the price of thermal coal would also further raise the size of the subsidy expected to be paid by the state government in supplying thermal coal to the privatised generators from its Cobbora mine near Mudgee.

The price of coal from Cobbora is expected to be under the industry benchmark of $65/t for power generation and well below export prices which are now expected to go well beyond $100/t.

Bottlenecks at the Port of Newcastle and the appreciation of the Australian dollar are further constraints on the value of coal exports from NSW.

Meanwhile, coal mines in central Queensland remain closed, with flooding and thunderstorm activity set to continue for several days.

Open cut mines that have recently been shut down include Xstrata’s Rolleston, Yancoal Australia’s Minerva, BMA’s Blackwater, along with the namesake mines of Jellinbah Resources and Ensham Resources, according to Reuters.

“Material impacts as a result of weather conditions will be included in our next quarterly production report,” a BHP Billiton spokesperson told ILN.

Queensland Emergency Services Minister Neil Roberts said the damage estimate was $A161 million.