22 January 2011
| Angeline Albert
BHP Billiton has reported a 30 per cent drop in coal
production between October and December last year due to flooding in Queensland
In its half-year
report, the mining firm said: “Queensland coal production was significantly
affected by the persistent rain and flooding that impacted the Bowen Basin in
the December 2010 half-year.”
The Bowen Basin
in Queensland is the largest coal reserve in Australia and the region
accounts for around 56 per cent of the world's exports of coking coal, an
essential ingredient in steel manufacturing. The company
reported a 24 per cent decline in the production of coking coal in the third
quarter, which ended on 31 December.
The report said the
heavy rainfall that persisted for much of the late last year “significantly
restricted” coal removal. “When combined with disruption to external
infrastructure, we expect an ongoing impact on production, sales and unit costs
for the remainder of the 2011 financial year.”
But BHP Billiton
added its coal sales benefited from a “healthy level of inventory that was held
across our supply chain at the commencement of the quarter”.
Spot prices for coking coal having
risen above $300 a tonne (£187) this week. Contracts signed before the floods
priced the commodity at $225 (£140) a tonne, according to the Sydney Morning Herald.
“As a direct
impact of the floods, coal prices have moved rapidly higher, with some
estimates indicating that coking coal prices could triple in the short term,”
said Australian bank Westpac’s chief economist Bill Evans in a statement.