Source: reuters // Reuters
* Residents sandbag homes in major city
* Floods to cut economic growth - analyst
* PM says floods will not prevent return to surplus in 2012-13
* Floods have hit coal industry, threaten tourism (Adds details on towns affected, coal industry)
By Michael Perry
SYDNEY, Jan 10 (Reuters) - Residents in Australia's third largest city, Brisbane, sandbagged their homes against rising waters on Monday as torrential rain worsened floods that have paralysed the coal industry in the northeast and now threaten tourism.
Prime Minister Julia Gillard said the cost of the floods would not delay a return to budget surplus in 2012-13, but J.P. Morgan predicted the disaster would crimp growth this year and could delay another increase in interest rates.
The worst floods in 50 years have at times covered an area the size of France and Germany combined in Queensland state. Six people have been killed while dozens of towns have been isolated or partially submerged. More monsoon rains are expected all week.
"People need to think about how to get out and if you don't need to travel, stay off the roads," said Police Chief Superintendent Alistair Dawson, referring to some of the smaller towns near Brisbane, Queensland's state capital.
Toowoomba, a major rural city west of Brisbane, was hit by a two-metre-deep wall of mud-filled floodwater which swept two people to their deaths and left others clinging to the tops of vehicles carried along streets by the torrent, police said.
In Brisbane, a city of 2 million, people in low-lying areas were given sandbags and warned the worst of the flooding might not occur until Tuesday or Wednesday.
Police urged motorists to stay off the roads in the state's heavily populated southeast, home to the Sunshine and Gold Coast tourist strips, Australia's premier tourism destinations.
Queensland Tourism said rains and flooding would hurt the industry, but it was too early to quantify the impact.
Australia's A$32 billion tourism sector was already in trouble due to the strength of the local dollar driving off overseas visitors and enticing Australians to go abroad.
The floods have caused an estimated A$6 billion ($6 billion)in damage and economists say they will cut economic growth in 2011 and heighten inflation as food prices rise and reconstruction begins in the nation's second largest state.
Queensland's $20 billion coking coal export industry has been brought to a virtual standstill.
"With more rain falling it could be months before the floodwaters clear and the extent of the damage to essential infrastructure is known," said J.P. Morgan chief economist Stephen Walters.
J.P. Morgan on Monday cut its GDP growth forecast for 2011 to 3.3 percent from 3.7 percent and raised its inflation forecast to 3.8 percent from 3.2 percent. That pushed out to May from February the likely timing for the central bank's next interest rate hike.
"Even inflation-conscious RBA (Reserve Bank of Australia) officials won't hike with Queensland under water," said Walters.
TOTAL DAMAGE BILL UNKNOWN
Gillard announced more aid on Monday, but said the floods would not derail an expected 2012-13 return to a budget surplus, with economic expansion now well into the 20th year and annual growth at 2.7 percent in December.
"I can't at this stage tell people what the total cost of recovering from these floods is going to be, because I can't predict the draw-down on infrastructure money until we see what's under the floodwaters," she said.
In Queensland's north, floodwaters containing toxic farm pesticides were flowing into the Pacific Ocean, threatening Australia's Great Barrier Reef, marine park officials and wildlife experts said.
"Toxic pollution from flooded farms and towns along the Queensland coast will have a disastrous impact on the Great Barrier Reef's corals and will likely have a significant impact on dugongs, turtles and other marine life," said World Wildlife Fund spokesman Nick Heath.
The flood threat was expected to be extended to towns in neighbouring New South Wales state.
A major concern now was the ground, so waterlogged that heavy rains were unable to be absorbed. Full rivers, creeks and man-made watercourses were bursting their banks.
About 116,000 mega litres of water -- equivalent to more than 100,000 Olympic swimming pools -- were being released daily from one Queensland dam, officials said.
COAL INDUSTRY HIT HARD
Floods have also paralysed operations that produce 35 percent of Australia's estimated 259 million tonnes of exportable coal. Australia contributes two-thirds of global coking-coal exports, needed to make steel.
Coal seam gas drilling in the Surat Basin, a major source of gas for an estimated $200 billion in proposed liquefied natural gas projects to be built this decade, has been halted by flooding.
Global miners Anglo American , Rio Tinto , Xstrata and BHP Billiton , have been hit by the floods, and all have made force majeure declarations, which release firms from delivery commitments.
Flooding has begun to recede in the main Bowen Basin coal region, but many mines remain flooded and will take weeks to drain and resume full production. While some rail links between mines and the ports have resumed, others remain under water.
Coal stocks were running low at the key coal port of Dalrymple Bay, but it was receiving enough to keep loading ships, while the port of Gladstone said it could be days to weeks before it starts getting coal supplies back to normal. (Additional reporting by Rob Taylor in Canberra; Writing by Michael Perry and Rob Taylor; Editing by Dean Yates)
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REFILE-WRAPUP 5-Australia floods inundate Brisbane, 67 missing12 Jan 2011
Source: reuters // Reuters
* Thousands evacuated, power cut, residents stockpile food
* Floods peak expected to last 3-4 days
* RBA member says 1 pct GDP impact possible
* Australian dollar hits fresh four-week low
* Brisbane port closed, coal industry at standstill (Refiles to put correct day in lead) (Revises missing and dead, adds latest on flooding and fresh quotes)
By Ed Davies
BRISBANE, Australia, Jan 12 (Reuters) - Massive floods shut down the centre of Australia's third-largest city, sent thousands fleeing from their homes and sparked panic buying of food on Wednesday as rescuers searched desperately for nearly 70 people missing in floodwaters.
The biggest floods in a century have so far killed 16 people since starting their march across the northern mining state of Queensland last month, crippling the coking coal industry, destroying infrastructure, putting a brake on the economy and sending the local currency to four-week lows.
The flood surge is expected to peak in Brisbane, a riverine city of two million people, before sunrise on Thursday and last for days. However, the peak will arrive within the next few hours in Ipswich, a satellite town to the west.
"The water is rising and swallowing up the city. It's really heartbreaking," said Ipswich Mayor Paul Pisasale.
Brisbane residents on Wednesday pushed food-laden shopping carts through drowned streets, others waded in shoulder-high water to rescue possessions, while boats and pontoons were ripped from moorings in the Brisbane River and smashed into bridges as the muddy brown tide gathered strength.
At flooded intersections people paddled surfboards through floodwaters, balancing their possessions on the deck of the boards, while boats ferried evacuees to dry ground.
"I am feeling a sense of horror and awe at the power of the river. Sadly in coming hours we will see bits of people's homes float down the river," Brisbane Mayor Campbell Newman said, warning the torrent could take three to four days to subside.
Rescue crews took advantage of some rare sunshine to look for 67 people still missing from tsunami-like flash floods that tore through townships west of the city this week.
"We can take no comfort from that blue sky," Queensland state Premier Anna Bligh told reporters, predicting almost 20,000 homes could be flooded at the river's peak in what she called Queensland's worst natural disaster.
"The water and the rain have already done their damage. This is a deeply serious natural disaster."
The worsening floods are forcing economists to raise estimates of the economic impact, with one central bank board member on Wednesday saying the disaster could cut 1 percent off growth -- equal to almost $13 billion, double the previous highest estimate. [ID:nSDYBCE7YF]
The Australian dollar sank to a fresh four-week low of $0.9803 on the comments from Warwick McKibbin, an academic and a member of the central bank's policymaking board.
Treasurer Wayne Swan in November forecast GDP growth of 3.25 percent in fiscal 2010-11, up from a 3.0 percent projection, but said spending would be cut to ensure a surplus of A$3.1 billion or 0.2 percent of GDP in 2012/13.
Food prices are surging around the country as the floods ruin Queensland crops and distribution networks. Prices for tomatoes have leapt about 200 percent in two weeks, while beef is up 11 percent and wheat has risen 4 percent in four months.
BRISBANE A DESERTED CITY
In Brisbane, thousands of homes and businesses were deserted as swirling floodwaters rose in and around the city, forcing residents to flee with few possessions to higher ground and to evacuation centres crowded with more than 3,500 people.
Some of the scenes in the city were surreal, with early-morning joggers trying to carry on as normal, even though parts of their routes were underwater. Others were distraught.
"This is my whole life, everything is gone. I never thought it would get this bad," said Kim Hung, manager of the Salt 'n' Pepper catering business, as two friends floated a coffee machine toward higher ground.
Raw sewage began spilling into the river and creeks, prompting authorities to warn of a heightened disease risk as damaged water treatment works polluted the floodwaters.
Bligh said she expected about 19,700 homes to be flooded at the river's peak, affecting up to 45,000 people. The military is running relief flights with helicopters and C-130 transports.
Dams built to protect Brisbane and outlying towns were spilling floodwaters into swollen rivers. The Port of Brisbane was closed, shutting down Australia's third-busiest container port and a 5-million-tonnes-a-year coal-loading facility.
Australia is the world's biggest exporter of coking coal, which is used in steel manufacturing and accounts for more than half of global exports, and is also the second-biggest exporter of thermal coal used for power generation.
Power company Energex shut power to some low-lying areas of Brisbane, including parts of the financial district, for fear that live power lines could electrify floodwaters. Some 78,000 homes in the southeast of Queensland were without electricity.
'TERRIFYING, CHAOS'
Queensland Premier Bligh advised people not to leave their homes if they are safe and to conserve water in case fresh supplies were interrupted. "As crazy as it sounds, now is not a time to be wasting water," she said.
Prime Minister Julia Gillard arrived in Brisbane to inspect the devastation and said she was deeply concerned about the impact on jobs and livelihoods.
"I have been shocked. I think we've all been shocked by the images of that wall of water just wreaking such devastation. The dimensions of it are truly mind-boggling," Gillard said.
The floods have been blamed on a La Nina weather pattern in the Pacific, with Australia recording its third-wettest year on record in 2010, with two wet-season months to go. Weather officials are also forecasting an above-average cyclone season.
As the Queensland floods and rains move south, major rivers in New South Wales state have begun flooding or threatening to break their banks, forcing rural evacuations. In southeast Victoria state, heavy rain caused flash flooding and landslides, prompting fears a lake near Horsham could break its banks. However, underlining the country's summer of extremes, authorities in Western Australia battled huge bushfires. (Additional reporting by Rob Taylor in CANBERRA and Balazs Koranyi, Wayne Cole and Amy Pyett in SYDNEY)
(Writing by Rob Taylor; Editing by John Chalmers)
=====
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Tue, Jan 11 2011Scientists see climate change link to Australian floods
By David Fogarty, Climate Change Correspondent, Asia
SINGAPORE | Wed Jan 12, 2011 8:01am GMT
SINGAPORE (Reuters) - Climate change has likely intensified the monsoon rains that have triggered record floods in Australia's Queensland state, scientists said on Wednesday, with several months of heavy rain and storms still to come.
But while scientists say a warmer world is predicted to lead to more intense droughts and floods, it wasn't yet possible to say if climate change would trigger stronger La Nina and El Nino weather patterns that can cause weather chaos across the globe.
"I think people will end up concluding that at least some of the intensity of the monsoon in Queensland can be attributed to climate change," said Matthew England of the Climate Change Research Center at the University of New South Wales in Sydney.
"The waters off Australia are the warmest ever measured and those waters provide moisture to the atmosphere for the Queensland and northern Australia monsoon," he told Reuters.
The Queensland floods have killed 16 people since the downpour started last month, inundating towns, crippling coal mining and are now swamping the state's main city of Brisbane.
The rains have been blamed on one of the strongest La Nina patterns ever recorded. La Nina is a cooling of ocean temperatures in the east and central Pacific, which usually leads to more rain over much of Australia, Indonesia and other parts of Southeast Asia. This is because the phenomena leads to stronger easterly winds in the tropics that pile up warm water in the western Pacific and around Australia. Indonesia said on Wednesday it expected prolonged rains until June.
WEATHER SWITCH
The Pacific has historically switched between La Nina phases and El Ninos, which have the opposite impact by triggering droughts in Australia and Southeast Asia.
"We've always had El Ninos and we've had natural variability but the background which is now operating is different," said David Jones, head of climate monitoring and prediction at the Australia Bureau of Meteorology in Melbourne.
"The first thing we can say with La Nina and El Nino is it is now happening in a hotter world," he told Reuters, adding that meant more evaporation from land and oceans, more moisture in the atmosphere and stronger weather patterns.
"So the El Nino droughts would be expected to be exacerbated and also La Nina floods because rainfall would be exacerbated," he said, though adding it would be some years before any climate change impact on both phenomena might become clear.
He said the current La Nina was different because of the warmest ocean temperatures on record around Australia and record humidity in eastern Australia over the past 12 months.
Prominent U.S. climate scientist Kevin Trenberth said the floods and the intense La Nina were a combination of factors.
He pointed to high ocean temperatures in the Indian Ocean near Indonesia early last year as well as the rapid onset of La Nina after the last El Nino ended in May.
====
BREAKINGVIEWS-Miners may shoulder some cost of Australian floods12 Jan 2011
Source: reuters // Reuters
-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --
By John Foley
HONG KONG, Jan 12 (Reuters Breakingviews) - It will be some weeks before the cost of Queensland's devastating floods becomes clear. But when it does, it is likely that the hit -- which could reach $13 billion by some early estimates -- is likely to fall partly, if indirectly, on Australia's miners.
Miners have already felt the brunt of the disaster. Coking coal producers in Queensland, a state which accounts for almost 60 percent of global exports, have been brought to a virtual halt. Pits accounting for two-thirds of the state's annual output have declared force majeure on some or all of their production, according to Reuters analysis.
The pain will mostly be temporary. Prices of metallurgical coal are set to spike following the floods, with Citi now estimating a 33 percent hike on year-end levels. For Queensland's miners, that should provide part compensation for lost revenues, and that might explain why BHP Billiton
But the economy at large will still shoulder costs, though the actual fix-up bill is hard to even guess. Central banker Warren McKibbin suggested the bill could equal one percent of GDP -- or $13 billion. A JPMorgan analysis puts the total at around half that amount.
A sum of that order would dent Australia's finances, despite the fact they are getting stronger. True, the central government runs a persistent deficit. But new Prime Minister Julia Gillard has promised to reduce it by 2013. And after a promising start -- the deficit was set to fall from 4.5 percent to 2.8 percent of GDP this year, according to HSBC estimates before the floods -- Gillard will find it hard to let that target slide.
That's where the miners come in. Politicians are still mulling plans for a super-tax on producers' boom-time profits. Back in July, miners seemed to have the upper hand: their lobbying saw Gillard temper the measures considerably, cutting the estimated tax take by some $1.5 billion a year. With the floods adding extra strain on the budget, those concessions may be clawed back.
===
Wild weather could push miners to reassess contracts, risks
08 Feb 2011
Source: reuters // Reuters
By James Regan and David Fogarty
SYDNEY/SINGAPORE, Feb 8 (Reuters) - A surge in weather-related disasters in Australia could push global mining firms to overhaul supply contracts and rethink how bad weather will affect their operations and customers worldwide.
Miners needed to better assess the threats from floods, storms and droughts and include weather data and risks in mine management and commodity contracts, said Robert Milbourne, a mining and resources lawyer for global law firm Norton Rose.
"Contracts must now more accurately address the consequences of weather variability and non-delivery due to weather," Milbourne, a former senior counsel for Brazilian miner Vale , told Reuters.
"Traditionally, severe weather disruptions would be deemed beyond the reasonable expectation of either party. If severe weather events gradually become more foreseeable due to meteorological forecasting capacity, then that forecasting (and planning) capacity will need to be reflected in transactions," he said.
A series of floods, drought and cyclones has badly disrupted mining in Australia, particularly in Queensland, where coking coal miners have been hit by severe floods twice in three years.
The latest floods along Australia's east coast, which began late last year, have led to 16 coal mines in Queensland state covering total annual capacity of 94.3 million tonnes declaring full or partial force majeure.
FORCE MAJEURE
Force majeure is a legal let-out that enables miners to break or suspend sales contracts without penalty.
Australia is a leading coking coal producer and Queensland produces 90 percent of the nation's coking coal from miners including Anglo American , Rio Tinto and BHP .
Eastern Australia's devastating floods would hit production at BHP's coal mining operations for at least six more months, the world's biggest miner said after output in Queensland fell by nearly a third in the last quarter.
Flood damage to mines and transport infrastructure will cost the Queensland government A$2.9 million a day in lost coal royalties for the rest of the financial year, which runs until June 30, a study by the Queensland Resources Council showed.
Droughts and cyclones can also be extremely disruptive, with iron ore mines in the northwest of Western Australia state vulnerable to powerful cyclones.
"The sequence and intensity of flooding and cyclones (in Queensland) has actually been down since the 1980s, so historically speaking they have had a pretty good run," said Queensland Resources Council spokesman Jim Devine.
But mining firms would not want to elaborate on risk management.,
"That is something that would be very commercially sensitive and not something mining companies would contemplate discussing in earshot of each other," he said.
BHP Billiton declined to comment on the likelihood of changes to its risk assessment strategy. When asked about risks from more intense cyclones in Western Australia
while iron ore major
Fortescue Metals Group said:
"Risk mitigation is already included in the planning, design and construction of Fortescue's operations and infrastructure due to weather events commonly experienced in the Pilbara," in a reference to a major iron ore region in the state. But it had not quantified the costs of risk mitigation, it added.
PRICING IN RISK
Milbourne said weather risk needed to be a much more central component of contract negotiations and such risks could also begin to be priced into the value of mine assets, such as the cost of operating mines in disaster-prone areas.
"I think commodity contracts such as coking coal will now have to expressly look much more seriously at force majeure and delay as fundamental commercial terms," said Milbourne, who is based in Queensland's capital Brisbane.
Climate scientists say a warmer world will cause greater extremes of weather and some scientists have pointed to climate change as factors in some weather disasters in Australia.
Reinsurers Munich Re say weather related disasters have tripled in Australia over the past 30 years.
"We're at the mercy of the environment and many stakeholders haven't fully analyzed that variability before," Milbourne said, adding he believed there was going to be a premium on getting accurate meteorological data.
Martijn Wilder, head of Baker & McKenzie's global environmental markets practice, agreed.
"We haven't seen a dedicated focus on making sure that force majeure events in contracts reflect what are catastrophic climate events," he told Reuters from Sydney.
Predictions of what were seen as extreme one-in-100 year events were becoming more frequent, he said.
"Insurance companies like IAG and Swiss Re have continuously made this point and yet a lot of neither industry nor government have taken real steps to mitigate against such events."he said.
But he thought the floods and last week's powerful Cyclone Yasi that struck northern Queensland might bring change.
"The rawness of the cost of such events and the ever-growing loss of infrastructure, livelihood and life, means there is a greater chance than ever that companies will really start to look at this,"
Superannuation funds also needed to take climate catastrophes into greater account when investing, he added.
"It's also an issue for those who invest in companies. If you're an investor in a mining company in an area that is susceptible to cyclones, should you start thinking about how this affects that company?"
(Editing by Clarence Fernandez)
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