Qld coal faces logistics nightmare

THE Queensland coal mining industry faces an elaborate logistics exercise to get its product to port once the 46 mines affected by the flooding start operating again, with the estimated cost of the deluge and its impact still growing.
Qld coal faces logistics nightmare Qld coal faces logistics nightmare Qld coal faces logistics nightmare Qld coal faces logistics nightmare Qld coal faces logistics nightmare

QR coal trains running through the Goonyella (Queensland) system.

Lou Caruana

The flooding, which is expected to shave 0.5% off Australia’s gross domestic product, or $6-7 billion, according to AMP Capital Investors chief economist Shane Oliver, has forced the closure of two of QR National’s five rail networks in central Queensland with two of the remaining three operating at reduced capacity.

Companies are already downgrading their production guidance and some analysts believe it is too early to put a figure on how big the impact on the coal industry will be, although Queensland Resources Council chief executive Michael Roche has used $1 billion as a preliminary figure.

“It is impossible at this stage to predict the eventual period of disruption or the financial impact to both the Queensland coal system and also to individual coal companies,” UBS analyst Glyn Lawcock said.

Queensland coking and pulverised coal injection coal producer Macarthur Coal said it expected to hit the bottom end of its first-half 2010-11 profit guidance of $97-102 million, issued three weeks ago.

Wood Mackenzie analyst Ben Willacy said mines affected by the flooding accounted for 91% of Australian hard coking coal exports and 100% of PCI exports.

Based on his estimates, Australia would lose 14 million tonnes of exports if each of the mines was unable to operate for a month.

Queensland Minister for Resources Stephen Robertson said 40 mines could not operate due to damage to infrastructure.

QR National’s Blackwater and Moura rail systems have been closed, with the others operating at reduced capacity except for the northern Newlands system, which has escaped the floods.

Mines that use the Blackwater system include Kestrel, Rolleston, Gregory, Curragh, Minerva and Cook as well as Jellinbah, East, Blackwater and Ensham.

The Blackwater system also services Stanwell Power Station, Gladstone Power Station, Comalco Refinery, Cement Australia and the Port of Gladstone’s two coal terminals, RG Tanna and Barney Point.

The Goonyella system, which accounts for almost 50% of the state’s 210Mt per annum of coal exports, is running at 60% capacity and services the coal mines in the northern and central areas of the Bowen Basin. Coal is transported from a number of locations to unloading facilities at the terminals of Dalrymple Bay and Hay Point Services.

Among these mines are Oaky Creek, German Creek, Goonyella, Carborough Downs, Blair Athol, Isaac Plains, Millenium, Gregory, Riverside, Moranbah North, Coppabella, Saraji, Hail Creek, Burton, North Goonyella, South Walker and Peak Downs.

Macarthur said yesterday it had resumed railing coal to Dalrymple Bay.

The Moura system, which should be opened later this month and has a capacity of 12Mtpa, services the industrial and rural communities of the Dawson and Callide valleys in central Queensland.

The system’s coal is transported to Gladstone Power Station, Comalco Refinery, Queensland Alumina Limited, Cement Australia and the Port of Gladstone. The Surat Basin Railway (Southern Missing Link) may connect the Moura system with thermal coal from the Surat region.

The Western system services the Surat Basin coal mines at Macalister and Acland, and Ebenezer. Export coal is carried down the Toowoomba Range through the Brisbane suburban area to the Port of Brisbane. Domestic coal is carried to Swanbank Power Station.

The 25Mtpa Newlands system, which is operating at full capacity, services mines at McNaughton, Newlands and Sonoma, conveying export coal to Abbot Point and domestic coal to the Queensland Nickel Refinery and the Bowen Coke Works.

It is widely expected that once production starts to build up again, there will be re-routing of coal that would have travelled through the Blackwater system to the Goonyella system.

QRC’s Roche said he was pleased to note that a specific group would focus on resource sector issues, such as the dewatering of minesites and restoration of business infrastructure, including road and rail networks.

“The QRC and its member companies will cooperate to the fullest extent to see their task achieved,” he said.

As Queensland supplies 40% of Australia's thermal coal exports, New South Wales’ Hunter region will come under pressure to fill the gap, putting more strain on the Port of Newcastle, the ANZ's head of commodity and industry research Mark Pervan said.

"If anything, that could slow the response out of Newcastle," he told ABC radio.

"We know it's prone to congestion and bottlenecks, so that's the next thing to watch, is rising shipping queues and slower output out of Newcastle."

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