Coal production cut by up to 40%

THE Gladstone Ports Corporation (GPC) is losing more than 40 per cent of coal to port production due to heavy flooding.

Last week The Observer reported that due to the recent heavy rains the GPC would most likely experience coal to port shortages making it a challenge to match the stock on the ground in order to keep loading on to the ships.

Gladstone Ports Corporation CEO Leo Zussino told The Observer the La Nina weather patterns were impacting on the majority of major coal exporting producers in the region.

“The impact of recent heavy rain and storms has created delays in the supply chain thereby causing inconsistency in the port's ability to load,” Mr Zussino said.

“Some Central Queensland mines are still experiencing difficulties however some mines have resumed full operation.

“Also the recent heavy rains have meant current train speed restrictions on the Blackwater line are reducing coal to the port by up to 40%.”

Five Central Queensland mines were forced to shut last week as flooding and bad weather swept through the region.

The mines include Xstrata's Rolleston, Yancoal Australia's Minerva, BHP Billiton Mitsubishi Alliance's Blackwater, Jellinbah Resources' Jellinbah mine, and Ensham Resources' Ensham mine.

In addition, several unnamed coal companies have decided to exercise force majeure on coal shipments out of the Port of Gladstone.

A “force Majeure” is a common clause that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control happens.

Mr Zussino said that poor weather conditions at most coal exporting regions in the world are causing supply shortages and as a result strong coal demand.

“This means we will see an increase in the number of vessels arriving at Fairway Buoy,” Mr Zussino said.

“Currently GPC has 17 coal vessels at anchor with a further 16 vessels expected to arrive this week.”

Mr Zussino said that despite the delays in the coal supply chain the port is still expecting to load around one million tonne of coal per week whilst stocks are available.

For the RG Tanner coal terminal to operate efficiently the port needs three and half to four million tonnes of coal on the ground. If requirements aren't met, the impacts could be up to 400,000 tonne of lost exports per month.

The last time coal deliveries were interrupted was due to a coal train derailment west of Rockhampton.