Rail freight giant Aurizon (AZJ) has joined the growing list of companies and industries hit by Cyclone Debbie and the flooding that followed its near record rainfall last week.
Aurizon told the ASX yesterday that the Cyclone’s impact and big wet will hit earnings for 2016-17, with a number of rail links around coal fields and ports in central Queensland facing several weeks of closure. Coal companies such as BHP Billiton, Glencore, Peabody and Anglo American are facing lost production and exports (as will the Australian trade account). BHP has said it will outline the impact in its quarterly production report in a couple of weeks time.
The insurance industry has warned that losses from the cyclone and associated flooding will exceed $1 billion (figures of $1.4 billion have been mentioned with more than 20,000 claims already received from customers in Queensland and northern NSW).
Much of the lasting damage to businesses and homes have come from the flooding through parts of central Queensland (Rockhampton floods tomorrow) as well as northern NSW, with some parts of the agricultural sector such as the sugar and fruit and vegetable industries (especially around Bowen in north Queensland) also facing heavy losses. Insurance giants such as Suncorp and IAG face many of these claims. IAG shares dipped 1.1% to $5.98 yesterday, while Suncorp shared fell 1.7% to $12.98.
Aurizon shares lost 1.1% to $5.19 yesterday after the company provided more detail about the impact of Debbie.
The company said some rail links connecting coal mines in central Queensland to the coast will be closed for as long as five weeks.
Aurizon warned that the prolonged closure of some rail links in Queensland will hit both the volumes of coal it transports to port and also earnings, although it is still too early to give a clear assessment.
The worst hit link is from Goonyella in the central Queensland coal fields to the ports of Dalrymple Bay and Hay Point (BHP) where it is expected to take as long as five weeks for shipments to resume, although further assessments are needed.
"Initial assessments indicate significant landslips have occurred in the rail corridor," it said, referring to an area west of Sarina.
"Further geotechnical assessment of this site will occur, however initial engineering assessment indicates recovery of the rail infrastructure will take approximately five weeks."
The company said alternative routes are being studied which may result in some coal from affected mines reaching ports further north, or south, but this will depend on capacity becoming available.
As well, the rail link from the Newlands mine to Abbott Point will not reopen for up to three weeks with a “significant number of sites with minor damage”, it said with no major damage reported so far.
But the link connecting Moura with Gladstone is expected to open in two weeks while the line from Blackwater to Gladstone is expected to re-open by the end of this week as flood waters recede.
"It is too early to assess whether there will be a change to Aurizon’s FY2017 volume and [earnings before income tax] guidance," the company said.
"As soon as the company has more clarity on the length of system closures and the options available to mitigate the loss of volumes, a further update will be provided."
The cost of any repairs to rail infrastructure is expected to be recovered, although when the income is received and the timing of the payment of the associated costs will have an adverse effect on this year’s earnings, it said. The Southwest Queensland (West Moreton) track that closed last Wednesday, is now open to the port of Brisbane allowing coal from and general freight to be transported.
The company said so far as general freight was concerned Aurizon is continuing to work with Queensland Rail for the operation of freight train services on the North Coast Line. The track was closed On Sunday at Rockhampton in anticipation of flooding this week.
Services between Brisbane to Rockhampton will resume immediately the track is open. This will allow Intermodal’s Seafreighter services between the Port of Brisbane and Rockhampton to resume. Intermodal is working with major grocery retailers to transport their product into north Queensland using the road network, where possible.
BHP said last night that crews are returning to work at its Central Queensland coal mines after heavy rain from cyclone Debbie shut down operations last week.
The company says all its mines across the Bowen Basin are resuming operations after rain from the huge storm affected access, power and services.
