Thursday, February 2, 2012

Australia braces for floods, threat to coal and crops

CANBERRA Feb 2 (Reuters) - Heavy summer rains across eastern Australia prompted authorities to issue flood warnings for vast areas of Queensland and New South Wales states on Thursday, including coal mining areas in the Hunter Valley.

The Bureau of Meteorology issued the flood warnings with heavy rain expected over the next 24 hours, following saturating rains over the past week which have already swelled rivers in New South Wales and Queensland.

Floods and wild weather last year inundated coal mines and damaged crops. Australia is the world's largest coal exporter and since it accounts for roughly two-thirds of global trade of coking coal, used for steel production, fresh floods particularly in Queensland could boost prices.

"Heavy rainfall and flooding along the east coast of Australia is expected over the next few weeks and is likely to further impact production and drive up Newcastle coal prices," Sereme Lim, an analyst at Standard Chartered Research, said in a note, but added that lower demand from buyers may limit the price impact. Read More