Australia's flood-hit Blackwater coal rail line to resume end-week
Perth (Platts)--4Feb2013/541 am EST/1041 GMT
Australian railway operator Aurizon, formerly QR National, said Monday
it expects to re-open its Blackwater coal line in central Queensland by end
week following severe flooding from ex-tropical cyclone Oswald last week.
The severe weather caused Bowen Basin miners like Rio Tinto, Wesfarmers
and Jellinbah to declare force majeure after the Blackwater and Moura rail
networks were impacted.
Damage assessments to both networks have started as floodwaters have
begun to recede. The smaller Moura system will return to operation in stages
over February 18-25.
"Repairs have commenced and at this stage we expect the Blackwater
system to reopen by the end of the week," said Mike Carter, executive
vice-president for Aurizon's, formerly QR National's, coal networks.
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A section of the Blackwater railway west of Duaringa has now reopened,
but 2 kilometers (1.24 miles) of submerged track between Edungalba and
Duaringa has sustained damage, the company said in an update on its website.
Blackwater has a capacity to rail 58 million mt/year of coal exports
from 14 mines to Gladstone port, according to Aurizon's website.
The Moura network, which serves Anglo American's Callide and Dawson coal
mines and Cockatoo Coal's Baralaba open-cut operation, closed January 25,
while the Blackwater line, serving a string of mines in central Queensland,
closed January 26.
Several sections of the Moura system have sustained track damage,
including 3 km of earthworks washed out between Stirrat-Clarke and Earlsfield
approximately 40 km from Gladstone port, and some track will need replacing.
"Given the extent of the damage in these areas, we are expecting to open
the Moura system progressively west from Boundary Hill from February 18, with
the last section impacting mines at Baralaba and Moura not to open until
February 25," Carter said in the update.
The Moura system carries about 12 million mt/year of coal from five
mines to customers including local power stations and Gladstone port.
Carter said initial reports were that the damage to Aurizon rail lines
was not as bad as during floods in 2011, and he stressed he was confident
coal producers would be able to recover lost railings.
"The majority of mines have not been as severely impacted as in 2011 and
have been able to continue operations and stockpile tons," he said.
FORCE MAJEURES REMAIN IN PLACE
Rio Tinto's 80%-owned Kestrel mine, which produces 3.8 million mt/year of
coking and thermal coal, remains under force majeure because of damage to the
Blackwater rail system, a company spokesman confirmed Monday.
Rio Tinto declared force majeure on coal sales contracts for Kestrel
on January 30, and at the time stressed its other export coal mine in
Queensland, Clermont, was unaffected by the closure of Blackwater.
Xstrata declared force majeure on a number of coal shipments from
Gladstone port on January 29 because of flood damage to the Blackwater rail
system, and a company spokesman confirmed Monday this was still in place, and
that it was in close contact with Aurizon.
Xstrata's 75%-owned Rolleston export thermal coal mine, which lies at the
end of a branch line off the Blackwater rail system, 423 km from Gladstone
port, is also understood to be still affected by the Blackwater suspension.
Commonwealth Bank of Australia analysts said in a January 30 report
that the impact of last week's flooding on Queensland coal exports was
likely to be much less than the flooding of 2011.
"If we assume a two-week delay of coal production and shipments due to
the rains, we estimate that 3.5 million mt of exported coal (thermal and
coking) will be impacted," Lachlan Shaw and Vivek Dhar said in the report.
"This is a much smaller cut in supply than the 15 million mt of seaborne
coal lost after cyclones ravaged Queensland in early 2011, which saw coking
coal prices surge 45-50%."
Shaw and Dhar said the risk of mines declaring force majeure was
dependent on whether stock levels at port could keep producers delivering on
contract, and whether rail congestion could block coal from reaching port.
Platts contacted Gladstone Port Corp. for details of its current coal
stockpile levels, but officials were not immediately available for comment.
--Mike Cooper, firstname.lastname@example.org
--Edwin Yeo, email@example.com
--Edited by Wendy Wells, firstname.lastname@example.org