[miningmx.com] — XSTRATA has declared force majeure at its Ulan thermal coal mine in Australia’s New South Wales state due to heavy rains, the company said on Tuesday.
“We have declared FM on certain customer vessels for the Ulan operation, following the interruption to production as a result of significant water underground following recent heavy rains,” spokesperson James Rickards said in an email.
A force majeure is a legal let-out suspending sales obligations due to factors beyond a supplier’s control.
The company is currently pumping water out the underground area but said it is currently does not have an estimate on when production will resume.
Ulan produces about 4 million tonnes of thermal coal annually and is 10% owned by a unit of Japan’s Mitsubishi Corp.
The impact of flooding in north-eastern Australia that began late last year has led to a number of force majeure notices on coal contracts, though most were in neighbouring Queensland state.
Xstrata also said that it currently has no estimate for when it’s 7.5 million tonne per year Blakefield South thermal coal mine, also in New South Wales, will restart production after a fire shut the mine in early January.
“The next step is to re-introduce oxygen into the area and to monitor for any potential for spontaneous combustion,” Rickards said.
The company will then send teams to visually inspect the damage to the mine, he said.
Australia accounts for almost two-thirds of global exports of coking or metallurgical coal, which is used for steel making. It is also the second-biggest exporter behind Indonesia of thermal coal, used for power generation.
