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PERSPECTIVE: Australian floods cripple coal producers

The flooding that has hit Australia's Queensland state over the last few weeks is wrecking havoc with, among other things, that country's coal industry. It supplies 159 million tonnes or two-thirds of the global export coking coal market, and...


The flooding that has hit Australia’s Queensland state over the last few weeks is wrecking havoc with, among other things, that country’s coal industry. It supplies 159 million tonnes or two-thirds of the global export coking coal market, and the collieries are closed for the time being.

Anglo-American, the largest producer, has closed its seven coal producers in Queensland. Rio Tinto, Xstrata and BHP Billiton are also major suppliers, and they have declared force majeure.

Asian steel makers are the largest buyers of coking coal, and they are watching the weather as closely as anyone. They say they have sufficient coal supplies for a month or two, but then they would have to turn to the spot market to replenish supplies. Some have already been forced into doing that. Buying on the spot market means paying higher coal prices than their contracted amounts.

Thermal coal producers have been hit by flood waters, too. They are either closed or have declared force majeure. The thermal coal produced in Queensland represents about 8% of the global export market or 57 million tonnes annually.

If the problem in Australia isn’t flooding, it’s fire. Xstrata’s Blakefield South coal mine in New South Wales is shut down due to an underground fire. No employees were injured.

Perhaps Canadian coal producers can boost their revenues by selling on the spot market, and that is our Hot Topic for today. Go the CMJ website to vote in the Hot Topic Opinions box on the left.

For more information about the Australian coal industry, go to www.AustralianCoal.com.au.