Xstrata Coal Declares Force Majeure Australia Floods

SYDNEY--Xstrata PLC's (XTA.LN) Australian coal unit Tuesday declared force majeure on several coal shipments that had been due to leave Queensland state after rail links were shut because of heavy flooding.

Coal miners across the resource-rich state had earlier reported disruption to production and transportation of the commodity after torrential rain devastated the region in the wake of the remnants of tropical cyclone Oswald. Declaring force majeure frees Xstrata Coal from liability for failing to make the deliveries as a result of the unexpected disaster.

"We have declared force majeure on a number of coal export vessels from the Port of Gladstone, as a result of flood damage to the Blackwater rail system," a spokesman said in an emailed statement.

Xstrata is the world's largest exporter of seaborne thermal coal, used to generate electricity, and one of the largest producers of coking coal, used in steel.

"We are monitoring the situation and are in close contact with Aurizon, the network operator," he added, declining to elaborate further on how many contracts were involved and their size.

Aurizon, Australia's largest rail freight company, said heavy rainfall had forced it to close its Blackwater and Moura rail lines, which transport coal from over a dozen mines in the state's south to the major coal exporting port of Gladstone and nearby refineries.

Crews were assessing the damage and working to get the lines running again, the company added. Xstrata Coal earlier said it was looking at "contingency plans' following the closure. That could include finding alternative routes to get its coal to port, or stockpiling material.

Still, coal production wasn't "materially affected" by the storm, the company spokesman had said.

Other coal miners, including Yancoal Australia Ltd. (YAL.AU) and Anglo American PLC (AAL.LN), also reported disruptions due to flooding, along with the road and rail closures.

Write to Rhiannon Hoyle at [e-mail] -0-

Original Email Message: http://SINNWSENEWSP1.newswires.dowjones.net/Enewsmails/Links.aspx?Ac=22&ID=201301 9-16308726-0

Subscribe to WSJ: http://online.wsj.com?mod=djnwires