Rio Tinto's alumina exports from Australia's flood-stricken state of Queensland were in the process of returning to normal as the company has rebuilt its coal inventories, and congestion eased at the port of Gladstone, company sources said Thursday.
Sources said Rio's alumina operations were in recovery mode although the company declared a force majeure Thursday on the supply of aluminium from Boyne Smelters Ltd. at Gladstone.
Floods have cut road and rail access between Gladstone and Brisbane and the Brisbane port, preventing metal deliveries to some domestic and international customers. Rio said it was investigating alternative arrangements including shipping aluminium from Gladstone port.
The port of Brisbane has been closed since Wednesday due to flood-related strong currents and debris. The threat from Queensland's floods have eased momentarily, local media said Thursday. Water levels at a number of rivers peaked lower than expected Thursday and have started to subside. The weather bureau has forecast light showers for the rest of the week and scattered showers next week.
Large parts of Queensland are expected to remain submerged for weeks but the respite from storms will give the state a chance to stabilize and start the process of cleaning up and recovering.
Although weather experts have anticipated several months of heavy rain and storms to come, there was a general view that their magnitude may not match what Queensland has already experienced.
On Thursday Rio executives said despite increased power cuts across the state, the company's two alumina refineries at Gladstone and Yarwun were in no danger of losing their supply entirely because they have independent generators.
The Yarwun unit appeared to be better off than the Gladstone facility in terms of fuel supply, as it runs primarily on natural gas for which transportation has been less of an issue than coal. Rio had been cutting its alumina output in Queensland from late December due to a coal deficit when acute flooding prompted freight rail operator Queensland Rail National to suspend its services.
QR said Thursday its halted Blackwater rail line which services Rio, could re-open in stages from January 20, pending no significant rain and recovery operations proceeding as planned. The Blackwater line is used by 14 coal mines operated by companies including Rio and BHP Billiton-Mitsubishi Alliance.
In the interim Rio has topped up its coal supplies with shipments via the port of Gladstone. "Everything is chugging along at QAL and Yarwun," a Rio executive said Thursday. "The refineries are OK and we don't expect [alumina] loading interruptions." "We had some some congestion and shipping delays at Gladstone but they're easing. We're moving back to normal," said another.
One of Rio's larger alumina customers said Thursday that there have been no significant delays in its shipments from Australia in recent weeks nor changes in future loading dates.
"There's been nothing excessive, no major delays," the importer said.
Industry participants generally think nothing of a week's delay. But a two-week delay would likely be a cause for worry for some buyers, depending on their existing stock. Rio can produce 5.35 million mt/year of alumina at Gladstone and Yarwun.
Slightly under half of this is usually exported, and the rest channeled to four Australian smelters that have the capacity to consume nearly 3 million mt/year of alumina.
The Gladstone alumina facility operates as Queensland Alumina Ltd and is an 80:20 alliance with Rusal that can turn out 3.95 million mt/year. Rusal takes the majority of its QAL alumina to Russia.
--Joanna Lim, joanna_lim@platts.com
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