Xstrata declares force majeure at Australia mines

Xstrata declares force majeure at Australia mines
Reuters - 1 hour 26 minutes ago

SYDNEY (Reuters) - Xstrata , the world's largest exporter of thermal coal, said on Wednesday it has declared force majeure on immediate shipments from two of its coal mines in Australia due to heavy rain, putting further pressure on coal prices.

A spokesman from Xstrata's coal unit said the force majeure will affect shipments from the Newlands thermal coal mine, which has a production capacity of about 8 million tonnes a year, and from the 4.9 million tonnes a year Collinsville mine, which produces both coking and thermal coal.

"We have just declared force majeure for the Newlands and Collinsville operations. This is due to the intense rains we have received in the last couple of days, which have damaged some of the roads and interrupted the rail system," said James Rickards, a spokesman for Xstrata Coal in Australia.

Rickards said it was too early to tell how long the force majeure will be in place. Force majeure is a term in a contract which allows firms to default on sales commitments to customers.

Production at the two mines, in the northern state of Queensland, had already been reduced since January due to rains, but Xstrata said it had been able to use stockpiles at the two mines to avoid declaring force majeure.

However more rain had fallen, and the production problems were further exacerbated by a derailment that closed part of the railway transport system at Newlands, preventing the movement of coal to the export terminal, Rickards said.

Xstrata is the fifth miner in Australia to default on coal sales contracts from Queensland after recent extreme weather.

BHP Billiton Mitsubishi Alliance (BMA), the world's largest exporter of coking coal, Ensham Resources Pty Macarthur Coal and Wesfarmers are other miners which have declared force majeure on coal shipments.

Thermal coal prices in Asia have already jumped 37 percent since the start of the year to a record high of $130 (66.36 pounds) a tonne, boosted by China's temporary export halt and the supply disruptions from Australia.