February 13, 2019 / 8:42 AM / in 5 months

Australia flooding to disrupt lead, zinc concentrate rail shipments

MELBOURNE (Reuters) - Floods in Australia’s Queensland state are set to disrupt the rail delivery of zinc exports to the northern port of Townsville, with the line likely to be out of action for at least a month, analysts said on Wednesday.

An aerial view shows flood waters in the suburb of Hyde Park, Townsville, North Queensland, Australia, February 4, 2019. AAP Image/Dave Acree/via REUTERS

The 1,000 km (620 mile) rail line is used by miners including Glencore, MMG Ltd and South 32 to carry zinc and lead concentrate from the Mt Isa region, with at least one miner eyeing more expensive trucking.

Townsville port ships about 40 percent of Australia’s zinc production, equal to about 700,000 tonnes a year or 5 percent of global supply.

Flooding rain raked the northern Queensland coast last week, before sweeping inland and submerging vast tracts of outback under record-breaking depths of muddy water.

Line operator Queensland Rail said it was waiting for floodwaters to subside so it could assess the damage, with a 400 km stretch of track closed between the towns of Cloncurry and Hughenden.

Haulier Pacific National, Glencore and emergency services are also assessing a stranded 80-wagon train carrying zinc and lead concentrate, and copper metal, that was moved to high ground ahead of the floods but found inundated in an aerial survey last week.

A Queensland Rail spokeswoman said it was too early to say how long the track would be closed.

“The site, near Julia Creek, remains significantly impacted by flood waters, meaning it is not possible to access the site,” Queensland Rail said in a statement.

“(Repair) work will involve the use of machinery, including cranes, and cannot be undertaken until flood waters recede and ground conditions allow.”

Analysts said the track was likely to be closed for at least a month depending on the scale of the damage, which won’t be fully known for at least a week.

“First they have to wait for the flood waters to recede to assess the damage. And then it depends if it’s damage to the rail line or damage to the embankments. If you’ve got serious earth moving to do, that takes time,” said Lloyd Hain of consultancy AME Group in Sydney.

Glencore said its North Queensland operations were continuing and that it was monitoring the transport network situation, while MMG said it was considering the use of trucks.

“We are aware of the impact to the rail logistics and are seeking alternative transportation arrangements involving the trucking of concentrate to the Port of Townsville,” MMG said in an emailed statement.

“At this stage production continues with product stockpiled at site.”

South 32 said it was unable to comment ahead of its results on Thursday. New Century Resources which transports its zinc by pipeline has not been affected, a spokesman said.

Reporting by Melanie Burton; editing by Richard Pullin

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