Australia’s Coal Exports Flood-Affected, Expected to Impact World Supply, Prices
Significant and extensive flooding in Queensland, Australia, continues and is having wide-ranging impacts on mines and mining infrastructure, including rail freight. A list of companies and operations impacted can be found here. Australia is the largest exporter of coking coal in the world.
The extent of the flooding can be understood at this map.
Queensland has benefitted substantially from the demand growth for tradeable energy commodities, mostly from Asia. Both the quantum, and value, of Australia’s exports of coking and thermal coal have increased significantly as previously graphed.
Coal is not the only energy commodity to be adversely affected by the high rainfall: Coal Seam Gas exploration has ground to a halt in the Surat basin, largely due to site access constraints.
Queensland Rail has reported tracks under water and the Blackwater rail link as inoperable due to inundation. Blackwater is a major coal mining area in central Queensland, surrounded by six major open cut mines – in particular Blackwater and Blackwater South which are each coking and thermal coal deposits. Blackwater describes itself as the Coal Capital of Australia, and lies west of the heavily impacted area of Rockhampton.
The rivers (including the Fitzroy) are still in major flood and the rain keeps falling – and there is more to come – though nothing signficant forecast for the rest of the week thankfully.
Gladstone, a major shipping point for Queensland coal which exports 60 Mt per annum, does not expect to receive meaningful coal freight for export for days yet. Bundaberg port is closed. Dalrymple, the largest coal export port in the world, is only operating at 70% of capacity.
A spectacular demonstration of flood impacts on coal mining operations can be found here – a relatively small operating project owned by Cockatoo and much-photographed in the last few weeks.
The Bowen basin would seem to be most heavily impacted by flooding to sites and infrastructure, though coking coal deposits are positioned in general in the north of the region.
Maccarthur and New Hope have each signalled interruptions or downgrades to production.
Some analysts are contemplating prices above $300 and possibly as high as $400/t for coking coal.
It is likely that the extent of possible impact on prices is overestimated, as fear may be somewhat driving prices. Until those companies that have issued force majeur statements for their operations are clearer about those sites and extent of damage, there will be little clarity.