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Anglo American declares force majeure on Australia
December 30, 2010 / 8:26 AM / 7 years ago

Anglo American declares force majeure on Australia

PERTH (Reuters) - Global miner Anglo American (AAL.L) has declared force majeure on its coal mines in Australia’s Queensland state due to prolonged heavy rains, joining a long list of coal firms hit by weather-related problems.

“Adverse impacts due to flooding vary across our operations and include disruption to road access, production and rail transportation,” the company said on Thursday.

“The full impact is not clear as rain continues to fall, with further rain forecast for the region.”

Torrential rains in Queensland state have plagued Australia’s $51 billion (32 billion pounds) a year coal industry for weeks, with coal production and coal export infrastructure heavily impacted by rains and flooding.

Coal mines with an annual production capacity of at least 80 million tonnes -- about 30 percent of Australia’s estimated 259 million tonnes of coal exports in 2009 -- are under force majeure.

Companies typically declare force majeure when they cannot honour legal contracts due to unforeseen acts beyond their control.

Anglo American is the latest to report difficulties after global miner Rio Tinto (RIO.AX) (RIO.L), port operators Dalrymple Bay Coal terminal and Gladstone Ports, and rail firm QR National QRN.AX all said on Wednesday that weather-related problems are forcing them to slow or halt operations.

Australia is the world’s biggest exporter of coking coal used for steel-making and accounts for about two-thirds of global trade. The nation also accounts for about 20 percent of thermal coal exports worldwide, making it the second-biggest exporter of the coal used for power generation after Indonesia.

Queensland produces mostly coking coal which is exported to be used in steel-making, but some mines also produce thermal coal. Queensland’s ports currently have an annual coal export capacity of 225 million tonnes.

The country’s unusually wet spring and early summer have already pushed both coking coal and thermal prices sharply higher and tight markets are keeping a close eye on further disruptions. <COAL/ASIA>

Earlier this month, the Australian Bureau of Agricultural and Resource Economics and Sciences forecast that Australia’s metallurgical coal exports will climb 2 percent for 2010/11 despite the rains, but cut its production forecast for coking coal by 7.3 million tonnes.

Anglo American is the second-largest exporter of metallurgical coal in Australia and owns two thermal coal mines.

Its mines affected are Callide, Dawson, Foxleigh, German Creek and Moranbah North, the company said in a statement.

Editing by Balazs Koranyi and Ramthan Hussain

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