Flood Affects Delivery of Queensland Coal

Besides destroying homes and placing lives of residents at risk, the flood water that has inundated New South Wales and Queensland is also threatening the two states' major source of income - coal.

Reports said the worsening flood crisis will cause BHP Billiton (ASX: BHP) to lose production from its large network of coking coalmines in the Bowen Basin following heavy damage on roads and other infrastructures. BHP is Queensland's largest coal producer.

BHP Mitsubishi Alliance, the world's biggest seaborne shipper of coking coal, is undertaking an assessment to determine the impact of the flood on the joint venture's operations.

BHP started on Friday to release water stored at its mines into the Firtzroy River system following Cyclone Oswald's pouring substantial rain into the Bowen Basin. BHP is expected to release more water in the next few days.

Queensland Environment Minister Andrew Powell said the agency, together with the federal Department of Environment and Heritage, is closely monitoring and regulating the discharges from the coal mines and tracking the cumulative impact of the water releases on the river.

Queensland Greens member Andrew Jeremijenko warned that the practice would only worsen the flood crisis in the state. He lamented the use of creeks and rivers of Queensland as company drains.

However, the impact of the flood on coal supply is expected to be less severe compared to the 2011 inundation of Queensland although insurers are preparing for more loss claims in Brisbane. So far insurance claims have reached $43 million amid continuous rise in river levels in many parts of Queensland.

Due to the risk to lives and property, Queensland Premier Campbell Newman urged remaining residents of Bundaberg to leave their homes which are in danger of being washed off their stumps.

The Burnett River in Bundaberg has hit a record 9.3 metres and is expected to reach its peak on Tuesday night. So far, the floods have killed four people in Queensland, including a three-year-old boy who died of injuries after he and his mother were crushed on Monday by a tree in Brisbane.