As Queensland coal producers face a multi-million dollar flood clean-up, experts say their southern counterparts are set to benefit from skyrocketing coal prices and greater availability of mining resources.
It could take up to two years to clean up the world's largest metallurgical coal export region and return the mines to full production, Deloitte corporate reorganisation group partner Gary Doran says.
The floods have crippled Queensland's coal industry, where 46 mines are either underwater or unable to transport coal due to rail disruptions.
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South of the border, it is a different story for NSW coal producers, with production continuing at high levels.
"In a nutshell, there will be a lot of benefits for NSW producers, in particular on the price side," Wood MacKenzie coal research analyst Steve Hulton told AAP.
Coking coal production
"If you are a producer in Queensland, you are not seeing the benefits of that. But in NSW that is immediately translated into a higher price on the spot market."
Wood MacKenzie has tipped the spot price of hard coking coal to hit record highs of between US$400 and US$500 per tonne in 2011.
The commodity was already in short supply starting the year, due to growing demand from China and India and heavy rain in major coal export regions of South Africa, Indonesia and Columbia.
Mr Hulton said producers of hard coking coal around Port Kembla and Wollongong would be looking to increase production as much as possible.
"Though they are already at high levels, so it doesn't mean they will be able to add much additional production," he said. "At a basic level all that hard coking coal (from Queensland) can't be replaced."
Dual producers in the Hunter Valley were likely to increase their output of coking coal and scale back on thermal coal to maximise profits, he said. "They have the ability in their production processes to vary the amount of thermal to semi-soft coking coal they produce," he said. "So you might see the Hunter Valley producers making a switch, although that could add further tightness into the thermal coal market."
Queensland recovery could take two years
The majority of coal mined in NSW is thermal and soft coking coal, not the high-quality hard coking coal of Queensland. However, Mr Hulton said the state's entire industry would benefit as the impact of the floods continued to spill into the market.
Deloitte partner Gary Doran said, based on his experience of flood recovery at Mt Isa, it would take one to two years for Queensland coal producers to completely clear flooded pits.
"To get the mines clear of the water so they can start mining again, they are going to have to import large pumping equipment and evaporators to get rid of the water," Mr Doran told AAP."That is a huge cost and it takes a lot of time.
"They will get mining up and running, but they will be dealing with this problem for the next 12 months to two years."
Mr Doran worked on the recovery of two Mt Isa copper mines following flooding in 2009. However, the shutdowns and curtailed production in Queensland would free up additional mining contractors and supplies for NSW, Mr Hulton said.
"Now all of a sudden, we have areas in Queensland that have backed off production while they assess the damage," he said. "That could easily translate into availability of skilled workers and physical products that are available in the short term."
Major players such as BHP Billiton, Xstrata and Rio Tinto had the ability to transfer workers based at their Queensland mine sites to NSW.
"For the larger companies in particular, that have operations in both states, they might look at transferring workers interstate," Mr Hulton said.
BHP Billiton has hard coking coal mines at Illawarra, and thermal coal mines in the Upper Hunter, while Rio Tinto holds interests in thermal coal and semi-soft coking coal mines in the Hunter Valley.
NSW coal heavyweight Xstrata has interests in more than 10 mines in the Hunter Valley exporting thermal coal. Among the smaller listed miners, Whitehaven Coal Ltd has exposure to thermal coal exports from its mines in the Gunnedah basin.
Gloucester Coal Ltd says it has been expanding its output of coking coal from operations north of Newcastle, despite above average rain in the area.
