Rockhampton: Australia’s record floods are causing catastrophic damage to infrastructure in the state of Queensland and have forced 75% of its coal mines, which fuel Asia’s steel mills, to grind to a halt, Queensland’s premier said on Wednesday.
The worst flooding in decades has affected an area the size of Germany and France, left towns virtual islands in a muddy inland sea, devastated crops, cut major rail and road links to coal ports, slashed exports and forced up world coal prices.
“Seventy-five percent of our mines are currently not operating because of this flood, so that’s a massive impact on the international markets and the international manufacture of steel,” Premier Anna Bligh told local television.
The Australian floods, which have cut off 22 towns, have been caused by a “La Nina” weather pattern, which produces monsoonal rains over the western Pacific and Southeast Asia.
The La Nina saw Australia record its third wettest year on record in 2010 and is expected to last another three months, the nation’s weather bureau said on Wednesday.
Queensland state is the world’s biggest exporter of coal used in steel-making.
“Queensland is a very big state. It relies on the lifelines of its transport system, and those transport systems in some cases are facing catastrophic damage,” said Bligh.
“Without doubt this disaster is without precedent in its size and its scale here in Queensland. What I’m seeing in every community I visit is heartbreak, devastation.”
The flood disaster, say analysts, is forecast to shave around 0.4 percentage points off GDP, which equates to just over A$5 billion of Australia’s annual output of A$1.3 trillion.
Residents in flooded towns worked desperately to build sandbag levees on Wednesday in the hope of holding back the rising waters.
In the cattle town of Rockhampton, a rise of just 20 cm (8 inches) in floodwaters would inundate another 400 homes and lap at the front door of a further 4,000 properties.
“Let’s hope we dodge the bullet. Every centimetre counts,” said Queensland state disaster co-ordinator Ian Stewart.
Some 200,000 people have been affected by the floods and three have drowned. Authorities are warning people to stay out of floodwaters, not just because of the risk of drowning. Snakes and crocodiles are being washed into homes and shops.
Macarthur Coal said on Wednesday it had resumed transporting coal by rail to Dalrymple Bay Coal Terminal this week, but force majeure remained in place and future coal trains would depend on coal availability.
“Once the pits are free of water, we’ll have more coal exposed that can be processed and transported,” said Nicole Hollows, Macarthur’s managing director. “It is not possible to predict when we will return to a steady state of mining as that largely depends on any future rain.”
Wesfarmers is also resuming output at its Curragh mine in the Bowen Basin, but retained its declaration of force majeure, which releases companies from contractual obligations.
A spokesman for Dalrymple port warned that unless mine companies resume production in the nation’s biggest coal region soon, coal export shipments could again be cut.
Some rail lines carrying coal from inland mines expected to stay partially underwater for another week.
“These mine areas are going to be affected for months to come,” said Jess Carey, a flood forecaster for the Australian Bureau of Meteorology.
“In terms of river levels, they might recede by next week but these big mining establishments are obviously going to feel the affects for months to come,” said Carey.
Coal mines with an annual capacity of more than 90 million tonnes are under force majeure.
Australia accounts for more than half of global coking coal exports, which are vital to steelmakers, especially in Asian countries such as booming China.
The floods have hit mines which produced 35% of Australia’s estimated 259 million tonne of coal exports in 2009. An estimated $1 billion has been lost in coal production, said the Queensland Resource Council.
Australian stocks fell 0.6 percent to a one-month low on Wednesday, with shares in global miners BHP Billiton and Rio Tinto losing ground and top banks such as Commonwealth Bank falling on concerns about their exposure to affected firms.
The Australian dollar also slipped back towards parity with the US currency, after shedding 1.2% the previous day.
“Our equity analysts think that a lot of coal mines in Queensland could be shut down for two to three months, so that’s going to be a substantial hit to exports going forward,” said David Forrester, FX strategist at Barclays Capital in Singapore.
While floodwaters are receding in the Bowen Basin coal region, flooding continued further downstream and fresh monsoonal rains are forecast to cause fresh flooding.
Flood warnings have been declared for seven river systems, with one swollen river now 6 km (4 miles) wide.
“It’s going to be two weeks before people...are able to move back into their homes,” said Rockhampton mayor Brad Carter.
Residents in the town of St George have built dirt moats to try and stop the floodwaters reaching their homes, but authorities fear 80 percent of the small town will be swamped if the Balonne River reaches a record 14 metres on Saturday.
“It’s started to rain here again. We could get a flood on top of our flood,” said Barnaby Joyce, a National party senator who lives in St George.
Australia is the world’s fourth-largest wheat exporter and the flooding in Queensland, along with heavy rains and earlier flooding across eastern Australia, could mean up to half the national crop -- or about 10 million tonnes -- could be downgraded to animal feed or low-grade milling grains.
The floods have halted the transport of all grains in Queensland, said GrainCorp Ltd , the country’s largest grain handler. Queensland accounts for about 5 percent of Australia’s total wheat output, or around 1 million tonnes.
Supply concerns sparked by the waterlogged crop in Australia had helped benchmark US wheat futures to reach a 5-month high, before falling back slightly.
“The thing we are all very fearful of is that we’ve only just started our wet season. We’ve got three months of cyclone season to go,” warned Brent Finlay, the president of the rural lobby group AgForce.
“We’re trying to encourage people to get whatever they can done in anticipation of another hit and the forecast up here isn’t great.”