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Here Comes the Rain Again; Australian Mining Firms Get Anxious

Australian mining firms, especially those with operations in Queensland, are gearing for a potential massive rainfall in the coming months.

Australia's Bureau of Meteorology had earlier predicted a second consecutive year of so-called La Niña conditions to hit the country. La Niña is a climate cycle that brings heavy rain to the western Pacific, usually in a four-year cycle.

Earlier, the Bureau said Australia may experience a milder La Niña, wet but significantly weaker than last year's. However, continued monitoring showed worsening conditions, as the Southern Oscillation Index, a gauge used to measure La Nina strength, was seen at its fourth-highest recorded level since 1980.

What's worse, at least 56 coal mines in Queensland have yet to fully recover from last year's flood, and some 500 gigalitres of water remain stuck in the Bowen's open-cast mines.

Rainfall is a major problem for Australia's coal miners. The open-cut mines, excavated deep into the ground, naturally trap significant volumes of rainfall, which will be immediately converted into toxic reservoirs within hours if heavy flooding breaches the mines' barricades.

Eventually, miners will refrain from going to coal seams until the water is removed.

Earlier, the state government of Queensland lowered its forecast for coal exports to 184 million tons for the year to June 30, from a previous 200 million tons.

Coking coal is a key steelmaking ingredient. Last year's La Niña slashed 37 million metric tons of production from the $80 billion global steelmaking coal trade, jacking up prices by more than 50 per cent.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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