Thursday, 28 April 2011

Impact of the Floods

The 2010–2011 floods killed 35 people in Queensland. As of 26 January, an additional nine people were missing. At least seventy towns and over 200,000 people were affected.

Mining contractors
- Anglo American , Aquila Resources , Vale , Macarthur Coal , Rio Tinto , Wesfarmers and Xstrata own mines in Queensland which are either fully or partially under force majeure, which releases them from supply obligations. - BHP Billiton declines to disclose how much capacity is subject to force majeure. BHP has a joint venture with Japan's Mitsubishi Development.
- Peabody Energy , which has annual production capacity of more than 10 million tonnes in Queensland, has declined to specify which of its mines are under force majeure. The company cut its 2010 profit forecast last week, citing the flood damage in Australia. - Coal producer New Hope Corp said on Tuesday it had suspended all operations at its Queensland mines.

Mining contractors

- Leighton Holdings has halted work on Brisbane's $4.1 billion Airport Link, the firm's largest infrastructure project. Leighton said a number of its Queensland construction and contract mining operations might be affected by the weather, but the earnings impact would take time to assess.
- Downer EDI said on Wednesday all of the coal mines where it works in Queensland were running and it did not expect much impact on earnings. Some analysts said they expected operations to be affected.
- Industrea said only one of its mining services contracts was affected, at Cockatoo Coal's Baralaba mine. Industrea said it did not expect a material impact.
- UBS analysts say other mining service contractors exposed to the floods include Macmahon Holdings , Emeco Holdings , and Bradken .
- Boom Logistics said the wet weather had cut $1.2 million from its December earnings before interest and tax.

Port/rail operators
- Ports and rail operator Asciano said Wednesday floods had shut coal mines and damaged rail lines, warning the revenue forecast for its Pacific National Coal unit was likely to be hit.
- QR National , Australia's largest coal-freight company, has closed two rail lines servicing coal mines in Queensland. Parts of its Blackwater rail line are underwater, while it said on Tuesday a line servicing mines northwest of Brisbane had been closed.
- The Port of Brisbane has been closed. Dalrymple Bay Coal Terminal has been exporting coal at about 60 per cent of normal volumes in January, a spokesman for the port said Wednesday. Gladstone Port Corp said Monday it has not received any coal supplies for export since early last week due to disruptions. Neither Gladstone or Dalrymple provided an update on Tuesday.

Agriculture
Australia's wheat, sugar and cotton exports are expected to be hit by flooding, while fertiliser makers may also be hurt by reduced sales.
- Incitec Pivot is exposed on fertiliser sales to farms and ammonium nitrate sales to miners. It was too early to estimate the impact on the group's earnings, a spokesman said. It suspended operations on Dec. 23 at the 220,000 tonnes a year ammonium nitrate plant at Moura, a joint venture with Wesfarmers . The company plans to restart production this week and return to full production by the end of next week, depending on road access to Bowen Basin coal mines, a spokesman said.
- Farm chemicals maker Nufarm expects some lost sales in the near term due to ruined crops, mainly cotton and sugar. In the medium term, it sees the improved soil moisture driving strong demand for a number of products, but said it was too early to quantify.
- GrainCorp , Australia's largest grain handler. Floods halted transportation of grains in Queensland last week, but the harvest was already largely complete in that state, which anyway accounts for a small share of national output.
- Queensland Sugar Ltd, Australia's biggest sugar exporter, said it was buying more raw sugar from Brazil and Thailand as floods damage sugar cane crops.

Retailers

- Supermarket operators Wesfarmers and Woolworths face logistical issues getting produce into affected areas, according to local media. Woolworths said last week about 47 of its stories were affected.
- Shares in retailer The Reject Shop were placed in a trading halt Wednesday as the company assessed the impact of floods on a distribution centre in Queensland which services 90 of its 211 stores.
- Department store owners Myer Holdings and David Jones shut stores in flood-affected areas, according to local media.
- Paint manufacturer DuluxGroup has temporarily shut down a manufacturing plant in Queensland.
- Soft drinks bottler Coca-Cola Amatil warned on Jan. 6 that wet weather and a cooler summer would affect its earnings.
- Surfwear maker Billabong cut profit forecasts in December due to the wet weather.

Insurers
The Insurance Council of Australia, representing general insurers, says early estimates show insurers may pay out $150 million from 4,300 claims received, but this estimate was made before flash floods hit Toowoomba and raced toward Brisbane.
- Queensland's biggest insurer Suncorp Metway has received 2,500 claims so far from Queensland floods, while Insurance Australia Group has received 900 claims, including those from a tropical cyclone.
- Shares in QBE Insurance have also declined on concern about the impact of flood claims, although the level of claims received was not available.

Tourism

Fragile corals and marine life are under threat from floods flushing toxic sentiment into the Great Barrier Reef.
Queensland Tourism says rain will hurt the industry, with police telling motorists to stay off the roads in premier tourist destinations such as the Sunshine and Gold Coast. Travellers being urged to cancel holidays.
Qantas Airways says no immediate impact on flights but analysts expect bookings will be affected going forward. Virgin Blue shares fell 3.4 per cent on Wednesday due to fears about the impact of floods on bookings.

Coal seam gas
Coal seam gas drilling in Queensland's Surat Basin has been halted due to floods. - Easternwell Group, being acquired by Transfield Services , has ceased drilling in the region. The company is drilling wells for Australia's Santos , Malaysia's Petronas and state-run Korea Gas Corp .
- Canada's Savanna Energy says it has two rigs which cannot be reached. Savanna is drilling wells for Origin Energy Ltd and ConocoPhillips .

Others

- Refiner Caltex expects production to restart on Thursday at its Brisbane refinery, which it shut down last week due to an outage caused by heavy rains. A full return to production would depend on operations returning to normal at its Brisbane port, suspended due to floods. It estimated the unscheduled shutdown had cost it $5-10 million.
- The state's transport industry will be hit with hundreds of trucks stranded by flooding, according to local media.

Many species will have found higher ground but ground-dwelling fauna such as reptiles and small mammals, particularly those reliant on burrows for their shelter, will be highly impacted. Many will drown - others will become easy prey as they become stranded and exposed.
The longer it takes for the floodwaters to recede, the harder it will be for the surviving animals to find food and shelter. As with the horrific fires in Victoria, the aftermath may be significant and drawn out. Foraging for food will be difficult and most species cannot go for long without nourishment especially at this time of year when many animals have dependant offspring.
Vast tracts of riparian vegetation has been submerged or swept away. Even aquatic wildlife such as water rats, freshwater turtles and platypuses may struggle for survival in some areas.

 

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