Accident disrupts coal deliveries to Australian port

An accident on the Blackwater railway system has disrupted coal exports from Australia's 102mn t/yr Gladstone port in Queensland, which may take some time to resolve.

The accident occurred on the main Blackwater rail line that connects coking and thermal coal mines in the lower and middle Bowen basin into Gladstone, including the Curragh, Jellinbah East, Blackwater and Kestrel coking coal mines, as well as the Rolleston and Minerva thermal coal mines.

A truck collided with a car at Raglan — 50km north of Gladstone — at approximately 3am Australian Eastern Standard Time (5pm GMT) on 28 June, bringing down overhead power lines and coming to a stop across the railway track.

"The accident is affecting coal services on the Blackwater system, together with freight and passenger trains which use this rail corridor," a spokesperson at Queensland Coal Network operator Aurizon told Argus. Recovery work is under way and the repair process is "expected to take a number of days" to restore the line, according to Aurizon.

It is unclear how long repair works may take, although it is likely to be less than a week, an Australia-based source suggested. "It's still a bit early to say [what the impact will be]," another source said. "I'd guess they will try and get one line back up and running at a slower throughput rate while other lines/electrics are fixed."

The Moura rail system — which also delivers coal into Gladstone — continues to operate, delivering coal from the lower grade coking coal and pulverised coal injection (PCI) grade mines of Dawson and Baralaba.

The Gladstone RG Tanna coal terminal has a vessel queue of 12 as of 25 June, from 13 on 21 May and 23 on 23 April, although this may climb if the derailment disrupts coal deliveries for more than a few days.

Hard coking coal typically accounts for around a third of Gladstone's total exports, with lower-grade coking coal and thermal coal each accounting for a third.

Tighter supplies ahead

The accident is expected to further tighten supplies, especially with upcoming rail closures and maintenance on some of Aurizon's coal-hauling networks in July-August. The closure will involve one planned 96-hour maintenance closure on the Blackwater system and a 84-hour planned closure of the Gregory branch of the rail system.

The rail operator will also carry out bridge renewal work, with one track and a two-track bridge closed for two weeks, based on plans announced last year. "It is acknowledged that [this] will result in some capacity constraints during that period," an Aurizon spokesperson said on 7 June.

Argus last assessed the premium hard coking coal price at $237/t fob Australia on 27 June, down from $249.50/t on 3 June. The fob Australia low-volatile PCI price was assessed at $186.85/t fob Australia on 27 June, up from $169.15/t on 3 June.

The price spread between fob Australia premium low-volatile coking coal and low-volatile PCI has tightened gradually in the last six months, from $143.35/t on 2 January to $50.15/t on 27 June.