Australia Coal-Mine Floods Raise Costs of Cars, Planes, Washers

[phantom power]

May 13 (Bloomberg) -- At about 1 a.m. on Jan. 19, some of the heaviest rains in a century caused the Nogoa River in Queensland to burst its banks, sending 32 billion gallons of water into one of the largest coal mines in Australia.

``It was like watching Niagara Falls,'' said Peter Westerhuis, 46, general manager of operations for the mine's owner, Ensham Resources Pty. ``It filled the whole pit up in five hours.''

Almost four months later, two of Ensham's six coal mines, along with others owned by companies including Melbourne-based BHP Billiton Ltd., remain submerged. The greatest damage was in the Bowen Basin, the source of 40 percent of the world's steelmaking coal. As production fell, the price of coking coal tripled to a record $300 a metric ton last month, raising costs for the steel that goes into automobiles, airplanes and washers.

(...)

The rise in coal's cost, combined with record contract iron ore prices of at least $79 a ton, will add $160, or 18 percent, to the average cost of producing a ton of the grade of steel used in cars and appliances this year, according to Lennon's report.

http://www.bloomberg.com/apps/news?pid=20601109&sid=abKexXzbzeFs