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Cyclone could hit coking coal supply

AAP logoAAP 28/03/2017

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Heavy rain from Cyclone Debbie could curb the output of coal used to make steel and potentially dent economic growth.

Production at a number of mines in central Queensland's Bowen Basin, which supplies 60 per cent of the world's coking coal exports, has been lowered or completely halted as the powerful storm lashes the area.

Glencore's Collinsvale and Newlands mines and BHP Billiton's South Walker Mine are among those where production has been temporarily suspended.

Rail operator Aurizon has suspended coal services and stowed trains on the Goonyella and Newlands systems, while the Abbot Point, Hay Point and Dalrymple Bay ports have been locked down.

National Australia Bank senior economist Gerard Burg says the cyclone could damage infrastructure and slow coking coal exports, but the major risk to coking coal supply is flooding of mines.

"What potentially might be the bigger problem is if the system brings heavy rain into the Bowen Basin," he told AAP.

Commonwealth Bank mining and energy commodities analyst Vivek Dhar said many mines were flooded when Queensland was hit by Cyclone Yasi in February 2011.

Coal production fell 22 per cent in the March quarter of 2011, which led to prices spiking 40 per cent, he said.

The impact of Cyclone Yasi and floods on exports, particularly coal, caused the economy to shrink 1.2 per cent in the March quarter of 2011.

"The impact was quite long lasting and damage at the mine output level was ongoing," Mr Dhar told AAP.

"Looking at the tracking map of Cyclone Debbie it seems to be heading in a similar direction."

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