Queensland's floods slash India coal supplies

Ben Doherty, Delhi February 4, 2011

QUEENSLAND'S horrific run of natural disasters has sent Indian coal buyers - dependent particularly on the state's coking coal for steel production - scrambling to find new suppliers.
The price of coking coal in India has spiked because of the collapse in supply from Queensland mines, which were slowed and then shut by last month's floods, and now by cyclone Yasi.
The Queensland Resources Council estimated that 85 per cent of Queensland's coalmines were running at reduced capacity because of inundation following last month's floods.

Production was expected to fall by 25-50 per cent in the March quarter before cyclone Yasi hit.
India's unit of Standard & Poor's said this week the shortage of Australian supply would push up coking coal prices by 15-20 per cent to between $US260 and $US270 a tonne in April, when steel producers renegotiated their contracts with miners.
The spot price of coking coal has already shot up by $US40 to $US50, to $US280 to $US290 a tonne, according to a report by ratings firm Crisil.

Australia is the world's largest coal exporter, accounting for nearly two-thirds of the global coking coal trade. Ninety per cent of that comes from Queensland.
India is Queensland's third-largest coal customer, buying more than 21 million tonnes in 2008-09, more than China.
N. N. Gautam, from the Indian Energy Forum, said the Queensland floods had caused a worldwide shortage of coking coal.
"The difficulty in finding coal … we attribute to reduced production from Queensland, which is a major supplier to India and the rest of the world," Mr Gautam said. The Steel Authority of India is looking to the US to make up supply shortfalls, and has sought bids to supply 600,000 tonnes of coking coal.

The editor of Kolkata-based Core Sector Communique, Suvobrata Ganguly, said Indian steel manufacturers were being hurt by contracts with Australian miners that had been forced to declare force majeure.
"But force majeure is difficult for everybody,'' he said. ''The buyer suffers too because they do not get the coal they have a contract for, and they have to pay [a] higher price elsewhere."
But he said Queensland coal suppliers were regarded as among the most reliable in the world, and customers would return once production restarted.
"Australian coal companies are held in very high regard. They are very reliable, and these natural disasters, they are not the fault of the companies or the people.'' (sourced:www.smh.com.au)