Farmers and miners in Queensland are fearful about the effect that the worst flooding in decades may have on production.
Widespread flooding across parts of southern and central Queensland, where much of Australia's cotton, sugar and coal is produced has damaged crops and made transport difficult.
"It really is causing enormous problems," National Farmers Federation president Jock Laurie told AAP.
"When it comes to putting a dollar value it is very, very difficult to know at this stage, because we have got to wait and see what the final result with the cotton crop will be.
"It will be a matter of waiting until the waters subside and seeing whether it has done permanent damage to it or whether there will be some survival," he said.
Evacuations are underway in a dozen towns because of the floods, which have been described as the worst in 50 years.
Queensland Deputy Premier Paul Lucas said the likely damage bill would be in excess of $1 billion and the situation in parts of the state was very serious.
Senior resources analyst with Mine Life Gavin Wendt said coal production was being hit by the wet weather, pushing prices up.
Queensland is the world's largest producer of metallurgical coal, used in steel furnaces, and Mr Wendt said he saw no reason why prices could not rise above the $US300 per tonne record set during flooding in 2008.
BHP Billiton Ltd has reportedly offered a hard coking coal price of $US225 per tonne for the first quarter of 2011, up eight per cent from the previous quarter.
"Demand is still there, if not more exacerbated, while supply is more restricted," Mr Wendt said.
A spokeswoman for BHP Billiton, which has extensive coal interests in Queensland said any significant effects from the flooding rains would be included in the company's next quarterly production report.
Australia's largest coal rail company, QR National Ltd, said it was too early to make any estimate of the effect the wet weather would have have on earnings.
"Until these highly unusual weather impacts subside, it is not possible to make a full assessment on full-year published earnings forecast," it said.
Rio Tinto says severe monsoonal rain in Queensland has hit its operations and has called a force majeure on coal sales contracts from mines in which it has a majority interest.
The mines are Hail Creek, Kestrel, Blair Athol and Clermont in Queensland's Bowen Basin.
"The severe monsoonal rain, on top of the significant rainfalls in November and December, has had an adverse impact on mining operations, and has cut access roads and rail networks," Rio Tinto said in a statement on Wednesday.
Earlier this month, Macarthur Coal Ltd declared force majeure at its Bowen Basin operations in Queensland due to the unseasonal heavy rain. A force majeure is a a contractual clause that gives companies the ability to miss deliveries due to circumstances beyond their control.
A hydrologist at the Bureau of Meteorology, Jeff Perkins, said the rains in Queensland had eased a little but forecasters were expecting a wetter than average wet season ahead.
Mr Perkins said a La Nina weather event, in place since September, was associated with a greater than normal chance of rain and flooding in Queensland.
Share
