Australia's flood-stricken coal industry may be disrupted for months after key rail and road links were washed away, while some infrastructure could take years to repair, authorities said on Friday. The floods have swamped mines in Queensland state, paralysing operations that produce 35 percent of Australia's estimated 259 million tonnes of exportable coal. Australia accounts for two-thirds of global exports of coking-coal, needed to make steel.
"There are some aspects of the rebuilding of infrastructure that will take, potentially, years," Major-General Mick Slater, chief of the flood recovery operation in Queensland, told a news conference in flood-hit Rockhampton town. "We still don't know what it looks like underwater. I know that major roads, rail lines and bridges are all damaged."
A snap survey by Reuters showed the median expectation among analysts was that recovery in coal output to pre-flood levels would take about three months. Commodities form a large part of Australia's $1 trillion economy and coal is the top export earner, forecast before the floods to earn nearly $50 billion in revenue in fiscal 2011. "Until weather conditions improve, the situation could deteriorate further. Australia's exports will likely take at least a couple of months to normalise," Barclays Capital said in its daily commodities briefing.
The floods have affected an area the size of France and Germany combined. Three people have been killed and at least 40 towns are isolated or partially under water after the state's worst floods in 50 years. Damage has been estimated at $5 billion. A muddy inland sea has stranded some of Australia's best beef cattle on tiny islands of high ground, destroyed wheat and sugar crops, and the wet season has only just begun.
Floodwaters were receding on Friday in some areas only to inundate new ones. Authorities said even once floods reached a peak, water would not significantly recede for almost a week, leaving the Capricorn highway, which runs through the main coal region, cut off. The biggest coal port, Dalrymple, is running at near-normal export levels of around 200,000 tonnes a day despite the floods, but authorities are concerned they are simply drawing down inventories to meet shipments that may soon run out.
"We really have no idea at the moment what's happening with mine production. If we can't get it in, we can't ship it out," said Dalyrmple spokesman Greg Smith. Gladstone port, also with a daily export capacity rate of 200,000 tonnes, is closed. Queensland's mines minister and analysts say it will be months until mines in Australia's biggest coking coal area, the Bowen Basin, are fully operational.
"It's highly likely to be worse than the major floods of 2008, which severely hampered mine operations for two to three months and reduced Queensland coal exports by 9.5 percent or 3.5 million tonnes in the first quarter of 2008," Mark Pervan, a commodities analyst with Australia & New Zealand Bank (ANZ), said in a report. Asian steel-makers who buy the bulk of Australia's coal have been forced to look elsewhere. Park Cheon-tark of Hyundai Steel said the company had bought coal from Russia, Canada, the United States and China, while asking long-term contract sellers to ship earlier than previously agreed.
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