Australia floods have ‘enormous’ economic impact: Treasurer Wayne Swan

By Nichola Saminather; editors: Paul Tighe, Suresh Seshadri
January 23, 2011, 8:03 AM EST an. 24 (Bloomberg) — Australia faces an “enormous” economic impact from the worst floods in Queensland state in almost 40 years, with coal exports likely to be one of the “biggest casualties,” Treasurer Wayne Swan said. “Queensland’s rapid development has meant that its economic performance has a much bigger influence over our national economy,” Swan said in his weekly economic note yesterday. “Mines shut down in big coal mining regions like the Bowen Basin, and supply chains severely hampered” will affect exports. Queensland contributes about 19 percent of Australia’s economic output compared with 14 percent at the time of the 1974 flood disaster, Swan said. The northeastern state produces about 80 percent of the country’s coking coal, contributing 10 percent to exports and 2 percent to gross domestic product, he said. Almost two months of torrential rains have affected about 30,000 properties in Queensland, shut coal mines, cut rail lines and damaged crops. The cost to the nation of the clean up and rebuilding may be as much as A$20 billion ($19.8 billion), economists forecast. Swan said he will provide preliminary estimates of the floods’ economic impact in a speech in Brisbane on Jan. 28. … The floods may have cost coal producers including BHP Billiton Ltd., Rio Tinto Group and Xstrata Plc A$2.3 billion in lost sales, the Queensland Resources Council said on Jan. 17. Production stoppages have resulted in about A$600 million a week in lost revenue, National Australia Bank analyst Michael Bush said in a report on the same day. Coking coal, used primarily in steelmaking, may average $269 a metric ton in 2011, 10 percent more than previously forecast as a result of supply disruptions caused by the floods, Michael Parker, a Hong Kong-based analyst at Sanford C. Bernstein & Co. said in a report on Jan. 21. While the loss from coal exports “will be partly offset by higher prices, the loss of production will be hit much harder,” Swan said yesterday. The damage to Australia’s economy will be much greater than the 1974 floods in Queensland and other major natural disasters, including bush fires in Victoria and Cyclone Tracy that devastated Darwin in the Northern Territory in 1974, Swan said. It is also taking a toll on agriculture, tourism, and the retail and manufacturing industries, he said. …

Australian Floods Have ‘Enormous’ Economic Impact, Swan Says