Climate change in Australia hits met coal production


How much of the flooding in Queensland is due to climate change? Quite a lot I would say. So we could almost say that the higher quarterly prices facing the Japanese and others and the higher global spot prices (up to $230-240/t) in coking coal prices are due in part to climate change. Of course, strong Chinese imports have also helped!

SBB 9 March The worst flooding in outback Queensland for 120 years could result in a coking coal production loss of up to 10m tonnes, industry sources estimate. Though the heavy rain has not so far fallen directly in the Bowen Basin – the state’s metallurgical coal producing region – rail lines used to transport coal to the port at Dalrymple Bay are under water.

Anglo American Metallurgical Coal spokeswoman Jacqui Strambi told Steel Business Briefing that the met coal industry estimated that output of 5-10m t had been lost due to the flooding. The Blackwater railway system, the state’s second largest transporter of coal after the Goonyella line, has been closed for more than a week. The Moura line is also closed, while other rail links are operating at reduced capacity. SBB understands that Anglo American halted operations at two of its Queensland mines.

A spokeswoman for major producer BHP Billiton-Mitsubishi Alliance said there had been no impact to date from the weather on production at the company’s operations in the Bowen Basin. But there had been reduced rail service since February because of earlier rain.

With the floodwaters in Queensland still to subside and more damage to infrastructure expected, tighter supply of coking coal could push spot prices closer to $240/t from around $230/t currently. In its latest commodities report, Macquarie said new export supply from US producers could come on stream in the third quarter of this year but prices are likely to be “extremely tight” in the April-June quarter.

Australia exported 135m tonnes of met coal last year and is forecast to ship 150m t in 2010.

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2 responses to this post.

  1. Hmm that’s very interessting but actually i have a hard time understanding it… I’m wondering what others have to say….

    Reply

  2. We have had a look at demand implications of climate change – due to climate policy. While one might be able to impute a certain amount of counterfactual demand reduction, it is negligible for practical purposes in light of the quantum and rate of marginal increase in coal demand going forward.

    We didn’t consider the relative impact of climate policy on reduced impacts on supply.

    Some analysis and discussion here: http://climatecommercial.wordpress.com/2010/03/24/the-outlook-for-coal-economics-climate-policy-and-technology/

    Reply

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