by Ben Butler
CORPORATE Australia is beginning to count the cost of Queensland’s deadly floods, which have smashed railways, flooded mines and closed factories.
While the mining sector has borne the brunt of the financial damage, construction and retail are under pressure as rising waters bring work to a halt.
Leighton Holdings yesterday suspended work on its biggest infrastructure project, the $4.1 billion Airport Link toll road, and expected parts of the construction site to be under water today.
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Retailer The Reject Shop was yesterday in a trading halt because its key Ipswich distribution centre had been affected by flooding.
The centre, close to the Bremer River, services 90 of the bargain chain’s 211 shops.
Queensland’s biggest insurer, Suncorp, yesterday shut its call centres and warned it would take a hit of as much as $180 million to its first-half earnings. Further losses were likely to follow in the next few months.
Also shut were eight Elders branches, including its Brisbane office, DuluxGroup’s paint factory in the Brisbane suburb of Rocklea and Caltex’s refinery at Lytton, close to the city’s port. The port was closed and a line of carrier ships had banked up off the coast, where they will spend at least 22 days waiting to load.
The floods could cut the worldwide supply of coal by 5 per cent, causing prices to soar to more than $US290 a tonne, according to Commonwealth Bank research.
The floods’ impact on the dollar abated yesterday, with no repeat of Tuesday’s sharp fall. At 5pm, the Aussie was trading at US98.51¢, up slightly from US98.37¢.
Large swathes of Queensland’s coal rail system have been shut because of buckling and loosened rails.
Mining services company Asciano said the closure of the Blackwater coal system, which linked mines to Gladstone port, and operations on the Goonyella system, which ran to Mackay, would bite into the revenue of its Pacific National haulage division.
Revenue in New South Wales would also be hit because the entire system was congested and less coal was available, Asciano said.
“However, until the severe weather conditions subside it is not possible to make a full assessment of both the business and financial implications,” it said.
Boom Logistics said its operations in the Bowen Basin, Australia’s largest coal reserve, were running at half speed and would probably remain “subdued” for the rest of the month.
The company shut its Brisbane crane and cherry-picker hire sites yesterday to allow its workers to secure their homes. Its Toowoomba depot was closed.
Boom told the market December’s bad weather had already cost it $1.2 million in earnings but said it could not estimate the total flood damage bill.
Damage to mines and railways could take up to six months to repair, CBA analysts said in a note to clients yesterday.
The analysts predicted the floods would remove about 14 million tonnes from the world coal market and slashed their forecast for growth in coking coal volume from 10 per cent to 3 per cent in 2011.
The spot price of coal, about $US300 a tonne, was expected to move higher.
The price of June-quarter coking coal delivered under contract would rise from about $US225 a tonne to about $US293 a tonne, they said.
Leighton, which had already had its contract mining division hit by rain last month, yesterday said it had shut several construction projects.
Workers were yesterday building a levee in a bid to protect a tunnel under construction at Leighton’s Airport Link site, where operations have otherwise stopped.
“Staff are currently undertaking activities to protect project works and plant and equipment. However, we expect that a number of offices and some sections of the project will suffer inundation over the next 24 hours,” chief executive David Stewart said.
Mr Stewart said that in coming weeks the company would determine the impact of the “unprecedented and widespread” extreme weather on Leighton’s bottom line.
Already counting the cost was Caltex, which will take a hit of between $5 million and $10 million after tax in 2011. It revealed yesterday that its Lytton refinery had been shut since last week.
Heavy rain caused a steam outage on January 5, Caltex told the exchange yesterday.
It said it would step up production from today and would keep increasing it for the next 10 days but a return to full operation depended on the reopening of the Port of Brisbane.
Source: www.smh.com.au
