Queensland Flood Puts a Damper on Coal Production

Source:

"Production may plummet as rains could easily extend months past the norm."

Queensland's massive coal supply chain could take up to four months to fully recover from the flood crisis, which has forced the continued closure of one of global mining giant Rio Tinto's operations.

Credit Suisse analyst Melinda Moore said it could take Queensland's coal supply chain up to four months to fully recover from the floods across the state.

"We believe around five weeks of high-stress damage has occurred to Queensland's coal supply chain, with up to 70% of the Bowen Basin system impacted by flooding," she said.

She said the weather was unpredictable and she held grave concerns about the Bowen Basin, where the high water table levels meant further flooding was likely after heavy rains.

"In Indonesia, it has barely stopped raining for the past nine months. India's monsoon dragged on for three months longer than its seasonal norm," she said.

"Queensland seasonal rains could easily suffer a similar fate, with forecasters suggesting La Nina will not end before April."

Credit Suisse said it expected Bowen Basin shipments to hit a low of 33%, about 1.1 million tons—compared with the usual capacity of 3.4 million tons—until at least early next month. Coal shipments from the Bowen Basin are expect to lift progressively towards 100% over March and April.

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe