April 5, 2017 / 4:53 AM / 10 months ago

Hard running floodwaters to delay coal rail re-opening in Australia - source

SYDNEY (Reuters) - The reopening of Aurizon Holdings Ltd’s Blackwater rail line, a key link between coking coal mines and export ports in cyclone-hit northeast Australia, will be delayed after suffering more water damage than expected, according to a source.

The Blackwater line was scheduled to re-open later this week and start replenishing global coking coal supplies after Cyclone Debbie hit the state of Queensland and disrupted haulage operations. The system transported more than 60 million tonnes of coal last year and services mines operated by BHP Billiton (BHP.AX), Glencore PLC (GLEN.L) and Sojitz Corp (2768.T), among others.

However, a mining company employee with operations on Aurizon’s (AZJ.AX) Blackwater line told Reuters that floodwaters were “running harder than predicted”.

“Our understanding is the reopening of the rail line ... is likely to be early next week at best,” said the source, who requested anonymity.

Aurizon did not immediately respond to questions from Reuters.

Queensland accounts for more than 50 percent of global seaborne coking coal supplies. The export disruptions there have led to huge price rises in the steel-making material and opened the door for rivals to cash in.

Coking coal futures DJMcv1 on the Dalian Commodity Exchange, which was closed on Monday and Tuesday for a public holiday, jumped over 7 percent early on Wednesday to $197.80 per tonne, the highest level since December 2016.

    China is the world’s biggest importer of coking coal while Australia is the world’s top exporter.

    Blackwater is the second-busiest line servicing the Queensland coking coal industry and is the first scheduled to be brought back into operation.

    The neighbouring Goonyella line is the worst affected, with landslides damaging tracks at a critical mountain pass.

    Cyclone Debbie, which struck last week as a category four storm, one rung below the most damaging category five, has left a disaster zone stretching 1,000 km (600 miles) in Queensland, with subsequent flooding claiming at least six lives.

    Reporting by Tom Westbrook and Jonathan Barrett in SYDNEY.; Editing by Christian Schmollinger

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