Hanging QLD out to dry: 6 months on from the floods

The mining industry is slowly getting back on its feet following the floods that brought widespread devastation across Queensland and inundated coal mines in the state.

Miners with operations in Queensland went into part and full force majeure during the ‘once in a lifetime’ floods, releasing them from production and delivery obligations due to circumstances beyond their control.

While Mother Nature definitely had a nasty streak throughout the beginning of the year in the state, the wrath has been lessened and mining companies are reporting positive production rates and expectations.

Greg Germon from Cockatoo Coal told Australian Mining the company is expecting to be back on track with production estimates next quarter.

“The inundation on 29th of December definitely wasn’t good, but it is a one in 100 year event,” he said.

“We spent our first quarter dewatering the pit and preparing for new production and the positive news is that we should do as much production from the eastern syncline as expected.

“We are recovering, and weather permitting, our September quarter will be our first returning to normal output.”

Was the damage as bad as predicted?

A special report on the expected impact of the floods by IbisWorld earlier in the year predicted the loss of revenue for the mining industry to be $2.5 billion as a result of the floods.

IbisWorld senior analyst Ian MacGowan told Australian Mining it is still unclear whether that figure was correct, and it will be some time before the true impact is known.

“We don’t have dollar figures at moment,” he said.

“But in terms of output, it is certainly down, and black coal alone is down 36 pc in the 1st quarter.

“Lead is down 27.6 per cent, silver 34.8 per cent and zinc 17.7 per cent.”

Not over just yet: QRC

While companies say they are getting back on their feet following the floods and the Queensland government agrees, the state’s leading industry body said Bligh government may have been overly hopeful in its estimates.

Queensland Resources Council chief executive Michael Roche said the 2011-12 budget is based on a rebound in coal production and exports, despite the lasting production impacts of extensive flooding that began in September 2010.

‘We can only hope that Treasury’s forecasts are proved correct because as recently as last month, export data confirmed the coal industry is operating at around 75 percent capacity as a result of flooded pits and restrictions on water discharges,’ Roche said.

‘We must assume that the Treasurer has won assurances from Environment and Resource Management Minister Jones that the procedures governing water discharges from coal mines will be overhauled in the next month or so.

‘We’re heading towards another wet season with the equivalent of a Sydney Harbour worth of rainwater sitting in our coal mines,’ Roche said.

He told Australian Mining there is still progress to be made at mines in Queensland and the focus for many now is moving excess water around their operations.

“We should not lose sight of fact that mines themselves will still be carrying large quantities of water.

“We shouldn’t hide the fact that there will be a challenge to manage following the wet season.”

Impact of the floods on national economy

Federal Treasurer Wayne Swan said in the quarterly report that the National Accounts had been significantly impacted by the unprecedented weather conditions.

GDP fell 1.2 per cent in the quarter to be 1.0 per cent higher through the year,” it said.

“Floods and cyclones are estimated to have reduced real GDP growth by 1.7 percentage points in the quarter, mainly through lower coal and agricultural production.’

“The impact of the natural disasters is most evident in the large falls in coal and iron ore exports, and the weakness in agricultural production and tourism exports.

“Overall, the floods and cyclones are estimated to reduce real production by around $12 billion, of which $6.7 billion occurred in the March quarter.

“The impact of the floods and cyclones was most pronounced in export volumes, which fell 8.7 per cent – the largest quarterly fall in 37 years.”

Worst QLD disaster in living memory

While Queensland cops its fair share of unsavory weather at times, Germon told Australian Mining that “not in living memory [has there been] anything of this order.”

MacGowan said the state had never experienced devastation of such an extent because never before has the mining industry been so prosperous and pivotal to the economy.

“The scale of this seems much bigger than ever before and that’s because of the boom in the mine meaning more production is happening so more has been impacted,” he said.

At the recent MCA conference, Federal Minister for Resources and Energy Martin Ferguson said the impact of the floods was not yet over.

"While the outlook for Australia’s economy remains very strong we took a major hit earlier this year as a result of one of the worst natural disasters this country has ever seen.

He said the Balance of Payments for the March quarter demonstrated the biggest quarterly fall in export volume in 37 years, indicating the impact will be substantial.

“The Queensland floods shut down over half the coal mines in that state,” Ferguson said.

“Pumping out these mines and returning to production has required enormous efforts and industry is to be commended on the speed at which it has resumed operations."




To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.