London (Platts)--29Jan2013/840 am EST/1340 GMT

Xstrata's Australian coal unit has declared force majeure on several export shipments of thermal coal out of the Queensland port of Gladstone after rail links were shut because of heavy flooding, the producer said Tuesday.

The area around Gladstone was the worst affected when Ex-Tropical Cyclone Oswald hit the region last week.

"We have declared force majeure on a number of coal export vessels from the Port of Gladstone, as a result of flood damage to the Blackwater rail system," a spokesman told Platts in an emailed statement, without elaborating on how many cargoes would be affected.

"We are monitoring the situation and are in close contact with Aurizon, the network operator."

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The spokesman added that only thermal shipments would be affected by the declaration, adding that Xstrata's coal production in Queensland had not been materially affected.

Aurizon said the Blackwater rail line -- which also provides logistics for some coking coal mines in the region -- would remain closed for 7-10 days while sections of the track remain underwater.

Central Queensland coalfields have been affected by heavy rains over the past week with Yancoal Australia's suspension of production at Middlemount, a coking coal mine, and Yarrabee PCI and thermal mine.

Coking coal producers Wesfarmers Resources and Jellinbah have also declared force majeure on shipments due to rail link closures, market sources reported Tuesday.

One Singapore-based market source said that the rainfall had yet to have the same impact on thermal coal mining operations that it was having on coking coal mines, although prices have recently been supported by the threat of supply disruption.

The source said that the primary factor driving up FOB thermal coal prices was the forthcoming March Japanese power utility negotiations with Australian producers over annual contract prices.

"I think it's the approaching Japanese negotiations pushing prices higher...the rains are mostly affecting coking coal operations," he said.

Newcastle FOB 6,000 kcal/kg NAR prices have historically risen in the first quarter in the lead up to the negotiations with producers wanting to close the long-term contracts at higher prices.

The daily Platts 90-day Newcastle FOB price closed at $94/mt Monday, up $2.40/mt since the start of the year.

--Gareth Carpenter, gareth_carpenter@platts.com
--Jacqueline Holman, jacqueline_holman@platts.com

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