Xstrata, BHP South African Coal Disrupted by Rain

Jan. 13 （Bloomberg） -- Xstrata Plc, the biggest thermal coal exporter, and BHP Billiton Ltd. said deliveries to South Africa’s Richards Bay Coal Terminal, on their way to European and Indian power plants, were disrupted as rain halted trains.

“This has resulted in pressure on stocks at RBCT, which may impact some vessel loadings,” Xstrata’s local coal unit said in an e-mailed reply to queries today. BHP expects exports via the terminal to be affected, it said separately by e-mail.

Eighteen coal trains were canceled and another for carrying chrome was derailed last week as rain washed away rail lines and flooded homes including in the administrative capital Pretoria. Corn and fuel train lines were also closed indefinitely, state- owned freight rail operator Transnet Ltd. said yesterday.

Prices of coal for producing power may beat those for oil and natural gas this year as flooding in Australia and South Africa contributed to driving prices to a 28-month high. Thermal coal may climb 14 percent to $150 a metric ton in coming weeks, Credit Suisse Group AG analysts said in a Jan. 10 note.

Prices at Australia’s Newcastle port rose 23 percent to $131.80 a ton in the past two months and at South Africa’s Richards Bay by 26 percent to $126.39, according to IHS McCloskey data. Mining of coal used mainly for steelmaking has also been disrupted by the worst floods in Australia’s Queensland state in 50 years.

Rain in South Africa, which mostly produces coal for power plants, caused “severe disruption” to train services in the past month, Transnet said yesterday. Ports were affected as coal producers struggled to load and offload rail wagons, it added.

Rain Forecast

The national weather service forecast rain in the capitals of eight of South Africa’s nine provinces today. The Department of Water Affairs said yesterday that levels at the country’s largest dams exceeded 100 percent. About 32 people died and nine were injured in the recent floods in KwaZulu-Natal and Gauteng, the co-operative governance ministry said yesterday.

Richard Bay’s coal stocks fell to a three-year low last month after derailments, Richards Bay Coal Terminal said Jan. 4. Coal stocks were at 1.7 million tons at the end of December, the lowest since 1.16 million tons in December 2007.

“We’re at half of the normal stockpile levels,” Xavier Prevost, an analyst at Pretoria -based XMP Consulting, said by phone from the city today, adding inventories are normally 3 million tons or more. “January shipments from Richards Bay are going to be very low.”

BHP, Anglo, Xstrata

The terminal is owned by the largest coal producers operating in South Africa, including BHP, Xstrata and Anglo American Plc.

“There was some impact on rail, indirectly,” Anglo said in an e-mailed response to queries today, adding that there were no difficulties with shipments as it had sufficient stockpiles at RBCT. Xstrata said it’s working with the terminal to “manage any potential delays.”

South Africa mined about 250 million tons of coal in 2009, or 4.1 percent of world output, making it the seventh-largest producer, according to an Oct. 1 report by UBS Investment Research. Richards Bay shipped 63.4 million tons last year.

Transnet expects to meet, and possibly exceed, a target of shipping 65 million tons of coal by rail in the year through March 31 even after the disruptions, Mike Asevofitz, a spokesman, said by phone today. Transnet canceled 82 coal and other trains in the past month due to heavy rainfall, he said.

Samancor Ltd., the second largest ferrochrome producer, said in an e-mailed response to queries that it made alternative transport arrangements after the Transnet train derailment.

ArcelorMittal South Africa Ltd., the continent’s biggest steelmaker, said there has been “no immediate impact on production” as a result of adverse weather conditions.

--Editors: Tony Barrett, Amanda Jordan