Australia Floods to Worsen in East as Cyclone Looms in Northwest

CANBERRA (Dow Jones Newswires), Dec. 31, 2010

Floods devastating large areas of Australia's Queensland state will worsen in the coming days with more damage expected across the continent, authorities warned Friday.

Heavy rains and flooding in central Queensland have already cut coal production and exports from the region. Coal mining, haulage and export is the major industry in central Queensland, a major global supply source of coking coal, used in steelmaking. Central Queensland and the Hunter Valley in New South Wales are the heartland of Australia's A$50 billion-a-year coal export industry.

The floods have forced many of the biggest miners including BHP Billiton, Rio Tinto and Anglo American to stop production and cancel deliveries.

The port of Bundaberg has been closed to commercial shipping indefinitely, while coal supply to other ports operated by the Gladstone Ports Corp. has stopped due to extensive flooding. The port is now able to load only from existing stockpiles, Acting Chief Executive Craig Walker said in a statement Friday.

Crops and livestock have also suffered but a proper assessment of damage is expected only after floodwaters recede.

After the wettest spring on record across Australia, large areas of the northeast coast and central Queensland have received in the range of 400 millimeters to 600 millimeters of rain so far this month, according to the government's Bureau of Meteorology. The wet season in Queensland usually runs from December to March.

Increased rains this year are associated with a La Nina climate episode in the Pacific Basin. In a weekly tropical climate note this week, the weather bureau said La Nina conditions continue to dominate the tropical Pacific and weather models suggest it will persist through the Southern Hemisphere summer.

The flood damage can't be estimated for now, but likely will cost governments hundreds of millions of dollars, Prime Minister Julia Gillard said Friday. The natural disaster across Queensland is still unfolding, she said.

"I can't tell you what the damage is going to be because we are still in the middle of the flood," which will arrive at places like Rockhampton city in the coming days, she told reporters during an inspection tour of the region with Queensland Premier Anna Bligh.

Federal and state agencies are working together on disaster relief and recovery arrangements in towns in the path of floods such as Emerald, Condamine and Theodore, she said.

Bligh, who previously said the damage bill from the floods will run into billions of dollars, said a "very serious, dire" situation is emerging in and around Emerald town, warning Friday that a "large group of people will become homeless in the next 24 hours."

The Mayor of Rockhampton, Brad Carter, said floods in the city of 75,000 could peak at an all-time high by Tuesday and remain near peaks for about 10 days. It is possible authorities will have to invoke compulsory evacuations in parts of the city.

Gillard announced the government will provide extra payments of up to A$1,000 each for people significantly affected by the Queensland floods crisis, such as those who have lost their houses or whose houses sustained major damage.

That will be in addition to funds provided through the Natural Disaster Relief & Recovery Arrangements, which are being provided for counter-disaster operations and for the restoration of essential public infrastructure, including bridges, roads and schools.

There are 41 local government areas in Queensland that have been declared natural disasters zones.

The Chief Executive of lobby group Queensland Resources Council, Michael Roche, said the priority now is employee safety and the welfare of local communities rather than the broader cost to the industry, which is likely to be hundreds of millions of dollars.

"Many coal mines in the Bowen Basin are either operating with skeleton staff or focusing entirely on supporting their communities from what appears to be a major flood threat, especially in the central highlands," he said late Thursday.

In the far northwest, the government's Bureau of Meteorology said a tropical cyclone is expected to develop Saturday and move along southwest along the Pilbara coast, where much of Australia's liquefied natural gas and iron ore export industries are located.

Port Hedland and Dampier, ports that account for a third of the global trade in iron ore, are to close over the weekend ahead of the expected cyclone.

U.S. energy company Apache Corp. (APA) said it has suspended production at its offshore Stag and Legendre oil fields following the cyclone warning.

Australian energy company Woodside Petroleum Ltd (WPL.AU) said it has halted oil production at two offshore facilities ahead of the forecast cyclone.

"In response to the tropical low currently over the Kimberley (region), Woodside has shut in production from the Vincent oil field off the coast of (the town of) Exmouth and the Cossack Pioneer on the North West Shelf" in Western Australia, the company said in a statement.

Meanwhile, in southeast Australia, where ferocious wildfires claimed 173 lives early last year, authorities issued "catastrophic" fire warnings Friday with temperatures forecast in some districts at 44 degrees Celsius and strong winds.

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