Weather, Labor Disputes Disrupt Australian Coal Ports

Port agents GAC reported on Tuesday that a labor dispute is disrupting coal terminal operations at Port Kembla, Australia. Loading and receiving were halted for more than 24 hours, and there will be a partial ban on operations running through Thursday afternoon. At the time of the statement, one ship was waiting alongside the pier awaiting a cargo loading, four more were at anchorage and four were due to arrive by Friday. 

Separately, in Queensland, the disruption to coal loadings caused by Tropical Cyclone Debbie has not yet fully abated. Gladstone Ports has restarted ship loading at its RG Tanna Coal Terminal now that the cyclone has passed, but the rail lines that connect the region's mines to terminals on the coast have been heavily affected by flooding and landslides. Rail operator Aurizon says that it has deployed all available resources to repair the damage, but it cautioned that it may take up to a month to bring all services back to normal levels of operation.

Resources and northern Australia minister Matt Canavan warned that exports of as much as 13 million tonnes of coking coal could be delayed due to the damage to the rail links; however, he suggested that the mines themselves would not be as hard-hit as they were in 2011, when Cyclone Yasi wiped out 26 million tonnes of exports. 

"While there has been some damage to coal haulage rail lines that transport coking coal to the Dalrymple Bay and Hay Point coal terminals, the majority of mines should be able to stay open and stockpile production," Canavan said. “At the moment, the expectation is that they will then be in a position to make up for the lost transport time over the next few months."

In the interim, coal buyers in China – the world's largest consumer of coking coal – have reportedly turned to cargoes from Russia and the United States to fill the gap, and they have driven up the price of coal futures by significant margins. However, North Korea, a key source of coal for China’s factories, will not be able to take advantage of the rush for supplies due to sanctions related to its nuclear program: Chinese customs officials have recently begun ordering North Korean coal bulkers to return to their home ports fully laden.