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Floods, Cyclone Threat Hamper Australia’s Import-Export Logistics

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Flooding in Queensland, Australia continues to pose major threats to its residents. Hampered by submerged supply and logistical transportation systems, global coal mining companies have also raised force majeure clauses in face of transportation system closures and a tropical cyclone threat off the Northwest coast of Australia.

Australia’s Flooding Weather Condition in Central Queensland

The cities of Bundaberg, Condamine, Emerald, Rockhampton and Theodore have been hard hit by Australia’s devastating year-end flooding. Some of these cities may be isolated until mid-January, according to reporter Courtney Trenwith (“Towns isolated as airports, railways and ports are submerged,” The Sydney Morning Herald, 01/01/11).

While Emerald and Bundaberg residents are beginning to return home, rising waters in Rockhampton have the city of approximately 65,000 speculating that the last road out of town will soon be cut off by the rising flood waters. Flood waters have also reportedly impacted transportation from the Bruce and Capricorn highways. If these highways are cut off it is estimated that it will take 10 days to get out of Rockhampton.

Cyclone Threat Further Hampers Australian Export Markets

NASDAQ, reporting from Dow Jones Newswires, states that Woodside Petroleum Ltd. announced a halt to its offshore oil production at a third oil field, responding to a tropical cyclone threat off the northwest coast of Australia (“Australian Offshore Wells Shut As Cyclone Threatens Northwest,” NASDAQ, 12/31/10). Following the cyclone warning, US energy company Apache Corp. has also suspended production at its offshore Stag and Legendre oil fields.

Australia’s Port Hedland and Port Dampier account for a third of the global trade in iron ore. Both ports closed on 12/31/10 on news of the anticipated cyclone. Port Dampier houses the export facilities of Dampier Salt, Hamersley Iron and the North West Gas Shelf Project.

BHP Billiton announced suspension of Port Hedland’s inbound iron ore shipments, according to a statement released by spokeswoman Kelly Quirke. A spokesman for Fortescue Metals Group Ltd., a Pilbara-based iron ore miner, said shipping operations at Port Hedland have been suspended but “mining and processing have been unaffected.”

The Port of Bundaberg has also been closed to commercial shipping, according to a statement by Jason Pascoe, the port’s manager. Gladstone Ports Corp.’s coal supply-chain has also stopped delivering shipments to Australia’s ports due to the torrential flooding.

Tonnage destined for Japan have reported large impacts by the floods. Unable to load, ships capable of delivering 2.5 million tonnes sit at Australia’s ports at Hay Point and Dalrymple Bay.

Lost Coking Coal Mining Production

Coking coal mining, haulage and export is a major industry in Queensland, a significant global export supplier of hard coking coal, a key ingredient in steel production. A number of international coking coal mining producers in Australia have raised force majeure clauses which have allowed for non-delivery due to the flooding. This includes global mining giants Rio Tinto, BHP Billiton and Anglo American.

The Queensland Resources Council estimates that coal and gas companies face hundreds of millions of dollars in lost production due to suspended operations.

“Royalty forecasts are likely to be hit with freight lines cut and reports that many mines may not reach full production again for two to three months,” said Queensland Treasurer Andrew Fraser in a public statement.

In addition to reduced royalties, clean-up and recovery costs may put at risk Australia’s goal to reach a surplus within five years as it aims to reclaim its AAA credit rating.

General Disclaimer: This article is for information only and should not be substituted for legal or tax advice. Logistics software