Australia has reduced its forecasts for coal production and exports for the financial year ending June 2012 as its coal mining industry still reels from the effects of severe flooding at the beginning of the year. The drop reflects increasing fears that the country – the world’s biggest supplier of metallurgical coal – could take a further six months to recover.
The Australian Government has cut estimates for metallurgical coal production and shipment by 4.4% and 5.6%, respectively, for the Australian financial year ending June 2012. But industry commentators think there may be another downgrade on the way. “If the rains come early again next year, all bets are off for a full recovery,” said David Lennox, an analyst for research firm Fat Prophets.
Investment bank UBS is predicting that the coal industry will not recover until the end of the calendar year; twice as long as initial estimates.
The issue is further compounded by labour unrest between trade unions and BHP Billiton Mitsubishi Alliance, the world’s largest mining company. Smaller, temporary work stoppages may soon give way to full-scale strikes, which could result in production losses of up to 1 million tpw.
Coal, as its biggest export earner, is vital to Australia’s economy. According to Reuters, closure and damage to mines caused by the flooding and cyclones in Q1 2011 contributed to the biggest contraction in Australia’s GDP in 20 years. Despite the disruptions caused by the flooding, Australia’s metallurgical coal exports are still predicted to account for 60% of the global total for 2011.
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