Massive floods washing through northeast Australia, wiping out crops and swamping coal mines, are pushing up commodity prices and could shave national growth figures, economists said today.
The flood disaster in Queensland state, which supplies half the world's coking coal used for steel manufacture, has brought major mining operations to a standstill amid warnings it could be months before full production resumes.
'We have three-quarters of all of our coal fields unable to operate and unable to supply markets,' state Premier Anna Bligh said. 'There is likely to be a significant long-term effect of that, not only national but internationally,' she told state broadcaster ABC last night, adding it presented 'a remarkable problem out there in the mining industry'.
The catastrophic deluge, which has fanned out over an area the size of France and Germany combined, is driving up the prices of global commodities such as coal and wheat, analysts said.
Queensland coal production was already hit by unseasonal rains in the September quarter, meaning that companies exhausted their back-up inventory before the wet season hit with such power, they added.
Heavy flooding in Queensland in early 2008 took 15 million tonnes of coal production out of the state but it was too early to assess the impact of the current floodwaters, significantly larger than two years ago. That flood crisis saw prices for coal from Queensland peak at $305 a tonne.
The equivalent price was currently $253 but had jumped from $225 over the past three weeks and had the 'strong potential' to go higher, analysts said.
Economists said the impact of the floods was as yet unknown, but agreed they would likely hurt Australian growth in the short-term.
With the situation still developing and the prospect of additional rain still alive, Bligh has warned that mining firms will have a 'long, slow climb back to full production'.
Some residents would not be able to return to their water-logged homes for months, while the tourism sector - already struggling against a surging Australian currency - will also be hard-hit, Bligh said.
'Until these waters go down it's going to be hard to really fully assess the long-term economic and social impact but there's no doubt it's not just a one-off, week-long event,' Bligh said.
'This is an event that will have a ripple effect across Queensland, Australia and some parts of the international region for many months to come,' she added.
