Australia floods cause months, possibly years, of damage

Damage to the state of Queensland is expected to reach $5 billion.

GLADSTONE // Australia's flood-stricken coal industry may be disrupted for months as reports emerge of key rail and road links being washed away, while some infrastructure may take years to repair, authorities said on Friday.

The floods have swamped mines in Queensland state, paralysing operations that produce 35 percent of Australia's estimated 259 million tonnes of exportable coal. Australia contributes two-thirds of global coking-coal exports, needed to make steel.

"There are some aspects of the rebuilding of infrastructure that will take, potentially, years," Major-General Mick Slater, chief of the flood recovery operation in Queensland, told a news conference in flood-hit Rockhampton town.

"We still don't know what it looks like underwater. I know that major roads, rail lines and bridges are all damaged."

A snap survey by Reuters showed the median expectation among analysts was that recovery in output to pre-flood levels would take about 3 months. [ID:nSGE7050CC]

About 200,000 people scattered across an area the size of France and Germany combined have been affected by the flooding and three people have been killed. Damage from the floods, the worst in the state in 50 years, is estimated at $5 billion.

Floodwaters were receding on Friday in some areas but fresh flooding was forecast downstream. Authorities said even once floods reached a peak, water would not significantly recede for almost a week, leaving the Capricorn highway, which runs through the main coal region, cut.

Australia's $50 billion coal export industry has been brought to a virtual standstill.

The biggest coal port, Dalrymple, is running at near-normal export levels despite the floods, but authorities are concerned they are being supplied by stockpiles from mines which may soon run out. Exports could slump if mines do not resume production.

"We really have no idea at the moment what's happening with mine production. If we can't get it in, we can't ship it out," said Dalyrmple spokesman Greg Smith.

Gladstone port is closed, and more wet weather is forecast as the wet season has only just started.

Queensland's mines minister and analysts say it will be months until mines in Australia's biggest coking coal area, the Bowen Basin, are fully operational.

Asian steel-makers who buy the bulk of Australia's coal have been forced to look elsewhere to keep their plants running. [ID:nTOE70502T]

Park Cheon-tark of Hyundai Steel said the company had bought coal from Russia, Canada, the United States and China, while asking long-term contract sellers to ship earlier than previously agreed.

"With these inventories, we have no problem running steel plants through mid-April," Park said.

PUMPING WATER FROM MINES A PRIORITY

The muddy inland sea has stranded some of Australia's best beef cattle on tiny islands of high ground, destroyed wheat and sugar crops, and swept deadly snakes into homes.

London-listed Anglo American , one of the nation's top four miners of steel-making coal, and smaller Australian rival Cockatoo Coal Ltd have both said it could take some weeks to pump water out of their mines.

In 2008, flooding stalled some mines for as long as six months, but others began producing within six weeks.

Anglo's major rivals, Rio Tinto , Xstrata and BHP Billiton , have also been hit by the floods, and all have made force majeure declarations.

One commodities analyst estimated 45 to 50 million tonnes of steel-making coal were under force majeure declarations.

Australian stock market operator ASX Ltd made clear on Friday it expected miners and other flood-affected firms to make prompt disclosures about the impact on their operations. So far, only a few miners have issued detailed updates.

"Certainly if we think a company might need some prompting, we may well put a call into them," an ASX spokeswoman said, adding she was not allowed to comment on individual companies.

Analysts expect steel coals to rise as much as a third to $300 a tonne in the aftermath of the floods, pushing thermal coal prices higher in the process.

RAIL LINES WASHED AWAY

QR National , the main coal carrier in the Bowen Basin, said on Friday a major rail link would be under water "well into next week" and assessment of rail damage was being hindered by floodwaters.

Parts of the Blackwater rail line linking Xstrata's

Rolleston mine to the port of Gladstone, had been washed away by the force of the floodwaters, said an eyewitness.

"The ballasts have just washed away and the sleepers are hanging in the air," Ross Keely, a farm manager who flew over the flooded area, told the Australian Financial Review.

QR National said three of its four coal rail systems were operating in Queensland and that locomotives and wagons, which had been moved out of flood zones, were ready to resume hauling coal once mines started producing.

(Additional reporting by Michael Smith in Sydney and Cho Meeyoung in Seoul) (Writing by Michael Perry, Editing by Mark Bendeich and Dean Yates)