A floody big problem

As the ‘once-in-a-lifetime’ floods pummelled Queensland, mining companies were among those brought to a standstill when rain came down.

And as the flood waters rose, companies including Rio Tinto, Vale, Cockatoo, BHP Billiton, Aquila Resources, Macarthur Coal, Wesfarmers and Xstrata closed their operations and were under full or partial force majeure, allowing companies to miss scheduled deadlines due to circumstances beyond their control.

Special reports on the impact of the floods by IbisWorld predict the loss of revenue for the mining industry to be $2.5 billion as a result of the floods.

The report said more than 15 million tonnes of coal that would have been shipped has been lost since the floods began in December and export losses will total $2 billion by the end of 2010-11.

The loss of exports from the State has been picked up by the US and has also placed NSW mines under pressure to fill the gap.

"There’s likely to be a big swing towards Newcastle for that additional supply. We’re already hearing of customers that are already rushing there for more coal," Mark Pervan, from ANZ Commodity Research said.

While many are making predictions and estimating losses, the affects of the floods on mining will still not be known for some time.

"Once the pits are free of water, we’ll have more coal exposed that can be processed and transported, but it is not possible to predict when we will return to a steady state of mining as that largely depends on any future rain," Macarthur Coal chief executive Nicole Hollows said

Federal Resources Minister, Martin Ferguson told Australian Mining the industry is trying its best to get back on its feet.

"Now that the waters are retreating companies are focused on doing priority assessments. Clearly ports are heading up stockpiles so the sooner they get it going the better," he said.

With government departments only taking crisis calls and miners desperately trying to find ways to recover from the battering, they try to figure out the future of their companies and the State.

However, the mining industry has been one of the most generous donators to the flood relief, with Xstrata first to donate, contributing $1 million on 30 December.

Rio Tinto has given over two million dollars worth of donations, split between the Premier’s Flood Relief Appeal, Emerald charities and organisations.

BHP Billiton added to the $300 000 donated by the BHP Billiton Mitsubishi Alliance (BMA) with another million dollars and has pledged to match donations made to their Matched Giving Program.

Rio Tinto chief executive Doug Richie said his company wants to help out in any way they can.
“We have all been shocked by the extraordinary flood events that have impacted much of our state," Ritchie said.

"Queensland is home to many Rio operations and we have around 7,000 employees working and living in Queensland, some of whom have been directly impacted by the floods.

"In addition to this donation, Rio Tinto is helping in other ways during this time of need," he said.

"This is why Rio has launched an employee volunteering programme which allows employees based in Brisbane to receive their usual salary and benefits while helping in the clean up, without having to take annual leave."

Despite the assistance efforts from Australia’s major miners, it wasn’t long after the tragic floods hit before politics came into play.

Greens Leader Bob Brown attracted a barrage of criticism for declaring the mining industry partly to blame for the floods and should therefore pay for the clean up.

He wants half of a 40 per cent mineral resources rent tax quarantined in a fund to pay for future natural disasters.

Ferguson said Brown should consider the affects the floods have had not only on the mining companies, but also on the workers and their families.

"In the midst of this crisis, it is important to remember that it is not just the coal companies taking a hit," he said.

"Workers in the coal industry, their families and their local communities are suffering. It is time for pulling together, not pointing the finger."

As they try to get back on their feet following the devastating floods, there is still not a lot of light in the near future for the mining industry.

The skills shortage is only expected to worsen as mines need more staff to deal with the impacts of the tragedy, and more floods are expected across Queensland, according to long term forecaster Haydon Walker.

He says there is more heavy rain to come, with a second cyclone expected to form in late January and three more in late February and early March.

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