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Tekla BIMsight

05 Nov 2012

Heavy Rains Flood Australian Coal Mines

Heavy tropical rains fell relentlessly in Australia’s Queensland area causing severe flooding and a shutdown, at least temporarily, of some of the country’s most prolific coal producing mines.Coal

Huge companies, such as BHP Billiton operate extensive open pit mines in the region and they were all forced to suspend operations and coal production for three weeks, perhaps much longer, as a result of the barrage of water that fell from the sky.

Australia is, of course, the world’s largest producer of coal so the forced closure of the mines, even for a short period of time, is likely to have a dramatic impact on coal supplies worldwide.

The badly inundated mines will require the efforts of large work crews to be repaired and restored so that they can open in just a few weeks time. At the same time, flooded roads, led to an almost immediate cessation of rail haulage because trucks could not haul – and deliver—coal to nearby railroads.

While the heavy rains and floods were clearly a problem to an important industry, weather professionals in the area claimed that they were not nearly as bad as the monsoon-like rains that literally overwhelmed Queensland just a couple of years ago, in 2011.

Those rainstorms resulted in the evacuation of countless thousands of local residents and actually caused the deaths of four people.

Queensland Resources Council Chief Executive Officer (CEO), Michael Roche issued a public statement in which he said that the country’s coal industry will require a minimum of several weeks to become reactivated and to resume full production.

As mentioned earlier, Australia is the world’s largest exporter of metallurgical coal and is responsible for a full two thirds of all global trade. The country, as represented by major domestic companies, is also a major exporter of thermal coal which is used in power generation.

BHP Billiton was not the only major coal producing company to suffer a “hit” by the heavy storms. Yancoal/Peabody, another major producer and exporter of coal, had its mine shut down, as well.

As often happens, however, the drop in production of coal, at least in the short term, will probably result in higher prices for it.

The increased cost for this very valuable raw material will almost certainly provide some much needed relief to corporate revenues, to workers and, of course, to the local and national economies.

That said, it is still critically important that work crews get all of the affected mines up and running, as quickly as possible, to fully restore normal production. 

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