Flooding halts Australian Newcastle coal deliveries

The main rail line connecting Australian thermal and semi-soft coking coal mines in the Hunter valley region of New South Wales (NSW) to the key port of Newcastle remains closed for the sixth straight day because of flooding, with it expected to take weeks to repair the Blue Mountains line closed following a landslide.

Floodgates are closed across the Australian Rail Track Corporation's (ARTC's) tracks at Maitland to prevent flooding of the town centre and will remain so for the immediate future, according to an ARTC spokesperson. Maitland is a key junction point where lines from across the Hunter valley join west of connecting into the port of Newcastle, with the flooding stopping coal from almost all Hunter valley mines reaching Newcastle.

Flooding closed the Hunter valley rail line at several places near Newcastle including Sandgate, Singleton and Maitland from the evening of 5 July, disrupting coal deliveries into the port. Water levels have receded marginally at Maitland but are still "far to high" to consider a return to normal service, the ARTC spokesperson said.

The Australian Bureau of Meteorology (BoM) still has a flood warning in place for the Hunter river at Maitland and expects it to remain in place to 12 July when it will make a reassessment. The BoM forecasts more showers for the region over the rest of this week but not the heavy downpours that occurred last week.

The Blue Mountains train line, which connects the western coal fields of NSW to Sydney and the ports of Newcastle and Port Kembla, also remains closed and will take weeks to repair following a landslide last week. The closure of the line, which was shut for around a month from mid-March because of a similar incident, mostly affects coal deliveries from Thai-owned Centennial's Springvale, Airly and Clarence mines.

Newcastle exports recovered in June to 13.06mn t from 12.43mn t in May but were down from 13.21mn t in June 2021, according to the latest data from the Port of Newcastle. The two Port Waratah Coal Services terminals shipped 8.7mn t in June, implying Newcastle Coal Infrastructure Group shipped 4.36mn t.

Non-stop rain

The Hunter valley floods follow significant flooding in March that left most Hunter valley coal mines saturated, with water storage facilities full.

Mines outside the Hunter valley that deliver coal to Newcastle, including Yancoal's 20mn t/yr Moolarben mine, Glencore's 10mn t/yr Ulan mine and Whitehaven's operations in the Gunnedah basin, will also be unable to deliver coal to Newcastle because of the Maitland flood.

Hunter valley mines include BHP's 20mn t/yr Mount Arthur mine, the 12.5mn t/yr Hunter Valley Operations joint venture between Yancoal and Glencore, Yancoal's 18mn t/yr Mount Thorley Warkworth complex, Glencore's 7.5mn t/yr Mount Owen and the 10mn t/yr United Wambo joint venture between Glencore and Peabody.

Argus last assessed high-grade 6,000 kcal/kg NAR thermal coal at $403.64/t fob Newcastle on 8 July, up from $383.82/t a weak earlier on concerns about supplies but down from a peak of $425.90/t on 20 May. It assessed lower grade 5,500 kcal/kg NAR coal at $191.41/t fob Newcastle on 8 July, up from $188.73/t on 1 July but down from a peak of $287.15/t on 11 March.

Argus last assessed the semi-soft mid-volatile metallurgical coal price at $231.25/t fob Australia on 8 July, down from $400/t on 31 May but up from $126.90/t on 19 July last year.

By Jo Clarke

Australian metallurgical coal prices ($/t)

Australian thermal coal prices ($/t)

Newcastle coal exports (mn t)