Business

Flooding impact could hit coal production levels

Peter Holt

AT LEAST one mine operation may be forced to announce a "force majeure" after being battered by cyclonic weather in Central Queensland.

The force majeure is a get-out-of-jail-free clause in coal contracts that allow mine companies to break a deal when faced by conditions out of its control, often considered "an act of God".

Yancoal and Peabody's Middlemount joint venture copped 420mm of rain when former tropical cyclone Oswald blanketed the region.

Yancoal is owned by the Chinese Government.

Spokesman Ian McAleese told APN its other two Central Queensland mines should be fine, but after Middlemount breached its levee wall, a force majeure could be on the cards.

"It's a bit too soon to tell at this point," he said.

The Queensland Resource Council chief executive Michael Roche said rail lines delivering coal from Blackwater and Moura to the Port of Gladstone were damaged after the area copped 800mm of rain.

"While the situation is still being assessed by network operator Aurizon (formerly QR National), these rail lines to Gladstone could be out of action for up to 10 days," he said.

Yancoal - like other mines - must also deal with the challenge of having its mine filled with water.

The Queensland Department of Environment said on Tuesday that no mine company had chased approval for a "temporary emissions licence" for a one-off permit to dump water.

Yancoal would likely be the first since laws creating the approvals were passed late last year.

"There is water in the pit so we have a three-week delay in production at Middlemount," Mr McAleese said.

"We have to pump the water out of the pit, but there's an environmental process to go through."

Mines owned by Anglo American, BHP Billiton Mitsubishi Alliance and Xstrata have each been affected by infrastructure issues, but were working to return to normal as soon as they could.

A BMA spokeswoman said any change in coal production would not be released until its next production report.

Topics:  coal, floods, production



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