The world's largest metallurgical coal producer and seaborne exporter, BHP Billiton, declared force majeure in Queensland Wednesday due to the impact of Cyclone Debbie on the Australian state's coal chain.
"BHP Billiton confirms that force majeure has been declared for all BMA Coal and all BMC Coal products as a result of damage caused by Cyclone Debbie to the network infrastructure of rail track provider Aurizon," a spokeswoman told S&P Global Platts Wednesday.
BHP has interests in 11 coal mines in the Bowen Basin through its joint ventures -- BHP Billiton Mitsubishi Alliance owns nines mines (seven operational, two in care and maintenance) and the Hay Point Coal Terminal south of Mackay. BHP Billiton Mitsui Coal owns two mines.
The force majeure is despite the miner sending workers back to all its met coal assets Monday and indicating that its Hay Point coal export terminal was "ready to receive coal."
BHP Billiton is the fourth Queensland miner to declare force majeure in the wake of the cyclone, after Yancoal's Middlemount, Qcoal and Jellinbah Group.
While mines in the region came out of the destructive weather system in fairly good condition and export terminals such as Hay Point are ready to receive coal, significant logistics issues remain. RAIL LINES CLOSED
All of the Aurizon-operated Central Queensland Coal Network rail systems remain closed, as well as the Port of Hay Point, where the Dalrymple Bay Coal Terminal and BHP Billiton's Hay Point Coal Terminal are located.
"BHP Billiton continues to assess haulage options to manage access from mine sites to ports and shipments to customers," the BHP spokeswoman said.
The Goonyella rail system, which connects mines to HPCT and DBCT, is the worst hit of the network, with Aurizon saying this week it expects it to remain closed for five weeks.
A market source estimated the Goonyella line to rail approximately 120 million mt/year of the estimated 180 million-190 million mt/year of coal shipped out of Queensland.
Estimates for the reopening of Aurizon's other three systems -- Newlands, Blackwater and Moura -- range from within days to a few weeks.
Newlands, which connects mines to the Abbot Point Coal Terminal, is expected to reopen in the next 2-3 weeks.
Blackwater, which briefly reopened last Friday before closing again on Saturday, is expected to reopen by the end of the week. Moura is due to restart in two weeks' time. Both of these systems connect to the Port of Gladstone, which has re-opened. SHORT-TERM PRICE HIKE
One Asian steelmaker said the likely impact of BHP Billiton's notice was that it "will cause a short term price hike, at least in April."
The source however indicated that once the railway lines recovered, spot prices would fall.
S&P Global Platts Tuesday assessed the premium low vol FOB Australia marker at $182.50/mt FOB Australia, up a sharp $31/mt since March 24, before Cyclone Debbie made landfall in Queensland. Global steelmakers were already seeking alternative supply options since news broke Monday that the Goonyella line would be out for five weeks.
There has been a flurry of spot trades of non-Australian coals concluded since Monday. BHP produced 8.68 million mt of metallurgical coal through its 50% interest in the BMA joint venture over October-December and 1.93 million mt through its 80% stake in BMC.
