Bloomberg Australian Coal Exports Hit by Train Derailment, Poor Weather

(Bloomberg) -- Coal exports from Australia have been cut after a train derailment emptied supplies at Newcastle port while shipments were suspended at the Hay Point terminal in Queensland following poor weather.

Ship loading at Newcastle in New South Wales will resume later in the week after rail services return to normal tomorrow, Port Waratah Coal Services Ltd., operator of the two terminals, said in an e-mailed statement today. The port is the world’s biggest export harbor for power-station coal.

Xstrata Plc and Peabody Energy Corp. stopped production and majeure at mines after “exceptional rain” in Queensland during the last week of February and the first week of March. Prices for steelmaking coal jumped threefold to a record $300 a metric ton in 2008 as floods in Australia and bottlenecks in port and rail infrastructure constrained supplies.

“There was a massive jump in contract prices a couple of years ago because of heavy flooding in Queensland,” Mark Pervan, a senior commodity strategist at Australia and New Zealand Banking Group Ltd. in Melbourne, said by phone. “The weather issues are certainly likely to have some bearing on price expectations for coking coal.”

Heavy rain in 2008 resulted in producers in Queensland, including BHP Billiton Ltd., declaring force majeure, a contractual clause that allows companies to miss deliveries because of circumstances beyond their control. The disruptions helped drive spot prices for power-station coal and the type used in steelmaking to a record.

About 3 million tons of coal output from the Bowen Basin was lost in the current quarter because of heavy rains, Pervan said in a March 9 note, citing reports that he didn’t identify.

Train Derailment

The train derailment and scheduled track maintenance work will result in export losses of about 570,000 tons of coal, Port Waratah said. Vessel loading stopped from New Castle yesterday, it said. Rio Tinto Group, Xstrata and BHP Billiton are among companies that export from the harbor. About 82 percent of coal exports from the port were used in power stations last year.

“The derailment will have a bearing on the spot market, but certainly won’t have the same sort of bearing on the contract market,” Pervan said, referring to thermal coal negotiations. “The spot market would react back down again as that event is overcome.”

BHP Billiton Mitsubishi Alliance said today the Hay Point port in the state’s north remains closed after shipping was halted on March 11. The terminal has two berths and a capacity to export 44 million tons of steelmaking coal a year, according to the North Queensland Bulk Ports Corp.’s Web site.

The alliance, known as BMA, is a joint venture between BHP and Tokyo-based Mitsubishi Corp. Export capacity at the terminal was halved last month after heavy rainfall damaged one of the berths.

Conditions will be monitored to decide when it’s safe to reopen the terminal, Amanda Buckley, a Melbourne-based spokeswoman for BHP, said by e-mail today. Hay Point was closed at 7:30 a.m. local time on March 11 after strong winds, Inchcape Shipping Services Pty, which arranges ship dockings, said in a statement on its Web site.

--Editors: Raj Rajendran, Ryan Woo.