Australian floods cut copper, zinc shipments

Published: Feb 19,2009 16:42:47


Xstrata, Rio Tinto and Kagara are companies which have been hit hard by Australian floods which have cut road and rail links and interrupted ore and concentrate shipments.

Flooding in Australia has left many key mine supply routes impassable, delaying hundreds of thousands of tonnes of copper, zinc, iron ore and precious metals shipments bound for coastal refineries and export terminals.

Some of the worst flooding is disrupting mining and railway transport at Xstrata Plc's (XTA.L: Quote) giant Mount Isa copper, zinc and lead complex in tropical Queensland state, the company said on Wednesday.

Washed out roads were also slowing shipments of zinc concentrate by Kagara Ltd (KZL.AX: Quote) to Korea Zinc Co Ltd's (010130.KS: Quote) Sun Metals refinery in Australia and also delaying copper concentrate exports.

Kagara, which is targeting production of 100,000 tonnes per year of zinc metal and 45,000 tonnes of copper metal within a year, has stockpiled enough ore to last until early March, the company's executive director, Joe Treacy, said.

But after that Kagara may be forced to idle its Thalanga ore processing plant and reduce output at a second one in Mt Garnet until the waters recede, he said.

Kagara holds a long-term zinc concentrate supply agreement with Sun Metals and long term copper concentrate supply pact with India's Sterlite Industries (STRL.BO).

Rains in northern Australia were also making it difficult to fully assess the impact on shipments from Mount Isa to the port of Townsville, where Xstrata processes much of its ore into refined copper, a company spokeswoman said.

Xstrata said in an earlier statement there had been "immediate impacts" on the supply of copper anode to its refinery in Townsville, which could lead to the export of less anode and more concentrate in coming months the spokeswoman said.

The weather bureau forecasts an easing of rain over Queensland over the next several days, though the region's annual wet season extends until the end of March.

Xstrata is Australia's largest copper producer and second largest zinc miner.

Shipments of zinc concentrate and lead bullion from the Townsville port during February and March would also be affected, Xstrata said.

"The prolonged heavy rainfall in north Queensland has caused significant damage to the rail link between Mount Isa and Townsville in the Cloncurry region," Xstrata said.

Railroad operator Queensland Rail has advised it would take about three weeks before the 700-km (430-mile) line was fully operational.

Xstrata runs two separate mining and processing operations at Mount Isa, centred on underground mining of copper and open pit mining of zinc, lead and silver.

Underground mining of copper has not yet been affected by the rains, according to Xstrata's spokeswoman.

But she could not immediately provide an assessment of any impact on separate zinc, lead and silver mining at Mount Isa. Open pit mines are typically more susceptible to flooding.

Mount Isa last year produced 190,000 tonnes of copper in concentrate and 240,000 tonnes of copper in anode form.

Another open pit mine owned by Xstrata, called Ernest Henry, with annual production capacity of 115,000 tonnes of copper-in-concentrate and 120,000 ounces of gold-in-concentrate has seen activity "start and stop" due to the rains," but was currently operating, the spokeswoman said.

Queensland Rail had begun surveying the damaged track by air in preparation to begin repairs, according to Michael Carter, Executive General Manager.

"The flooding has been so bad that the track has not been readily accessible by the crews on the ground," he said.

Flooding along the 50-mile (80 kilometre) road separating two main ports at Dampier and Cape Lambert in Western Australia was delaying an assessment by Rio Tinto Ltd/Plc (RIO.AX: Quote)RI.L on operations that unload up to a half-million tonnes of ore daily.

Five consecutive days of rain have forced Rio Tinto Ltd/Plc (RIO.AX: Quote)(RIO.L: Quote) to suspend iron ore mining and rail haulage over a large part of west Australia's Pilbara region, wih no end in sight, according to a company spokesman.

"There is no significant rail movement occurring on the affected lines," the spokesman said.

The Century zinc mine, Australia's largest, ships concentrate via a 400-km pipeline in Queensland and was unaffected by the flooding, a spokesman for owner Oz Minerals (OZL.AX: Quote) said. (Editing by Clarence Fernandez)

By  James Regan

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