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Australia cyclone shuts copper refinery, coal mines
Reuters - Thursday, February 3
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SYDNEY - Australia's huge Cyclone Yasi forced a copper refinery and coal mines to shut and paralysed sugar and coal exports as it began pounding the northeast coast on Wednesday, threatening to further inflate world sugar, copper and coal prices.
The edge of the cyclone, one of the most powerful recorded, came ashore in north Queensland state, heading directly for sugarcane fields and threatening a 300,000-tonnes-a-year copper refinery in the coastal city of Townsville.
"We've shut everything down and that situation is likely to carry on for several days until a clearer picture emerges," said Josh Euler, a spokesman for the refinery owner, Xstrata.
Global miners BHP Billiton and Peabody Energy have also shut several coal mines located in coal-rich Queensland ahead of the cyclone, whose centre is due to hit land early on Thursday.
BHP's Peak Downs, South Walker Creek and Broadmeadow coal mines were all shut, which have a combined capacity of over 15 million tonnes of coal per year of coking coal. Peabody closed its Burton mine, which produces 2.7 million tonnes of coal per year.
Earlier this week, a 30,000 tonnes-a-year nickel refinery at Yabulu shut down ahead of the cyclone, and the major coal export terminals of Dalrymple Bay and Gladstone stopped loading ships.
Shipping in and out of the region has come to a standstill, with ports along hundreds of kilometres of coastline closed and bulk carriers retreating from the cyclone zone to safe anchorages.
Copper prices climbed to a record high of nearly $10,000 a tonne on Wednesday, fuelled by tight supplies and optimism over growing demand. Any further disruptions to supply would only add pressure to the price.
AUSTRALIA SUGAR CROP AT RISK
The sugar crop is likely to be the biggest casualty from the cyclone, with Queensland accounting for almost all raw sugar shipments from Australia, the world's third-largest exporter.
"Certainly what happens in Australia will affect prices in the global market," a sugar dealer in Bangkok said.
The centre of Cyclone Yasi, one of the world's most powerful storms, is headed straight for coastal regions that account for around a third of the country's sugarcane production. It has already forced several sugar mills to suspend operations.
World raw sugar prices are hovering near 30-year highs because of doubts about Indian exports and the size of the crop in Brazil, the world's top sugar producer.
In New York on Tuesday the March raw sugar contract inched down to finish at 33.96 cents per pound, although traders said fundamentals remained bullish.
The country's main sugar cane growers organisation, Queensland's Canegrowers, estimated on Wednesday that industry losses could exceed A$500 million , including possible cyclone damage to infrastructure.
Last year's sugarcane harvest, ended in December, fell to 27.3 million tonnes of cane because of recent heavy rains. Typically, production totals 32 million to 35 million tonnes.
About five million tonnes was left uncut because of rain disruption and is most at risk being smashed by the cyclone because it is standing taller than the new 2011 crop.
COAL MINES, GRAZIERS ON ALERT
Yasi, one of the world's most powerful cyclones, is so large that it is expected to travel as far inland as the Mt Isa mining region, about 1,000 km inland, before finally breaking up.
Xstrata said it was bracing for high winds at its Mount Isa Copper mining and smelting unit and also at its Ernest Henry copper mining operations even further inland.
Most of Queensland's coal mines lie south of the cyclone's predicted march west across the state, but the northerly mines, such as Rio Tinto's Hail Creek mine and Xstrata Coal's Collinsville mine, have been closed. Xstrata was considering shutting its Newlands mine as well.
The Pajingo gold mine, south of the historic gold mining town of Charters Towers and yielding around 2,200 ounces a month, is well within the forecast path of Yasi, and the owner said on Wednesday that work had been suspended.
Queensland state's large livestock industry also prepared on Wednesday for heavy loses from Cyclone Yasi.
Australia's National Farmers Federation estimates that the cyclone could affect a fifth of Queensland's A$3.3 billion herd if it barrels through prime grazing areas.
Queensland, with about 12 million head of cattle, accounts for about 44 percent of the national herd.
Australia's banana growers also face major losses, with the crop now in full swing. In 2006, local banana prices quadrupled after Cyclone Larry destroyed 80 percent of the national crop.
"Losses will likely be catastrophic again," the National Farmers Federation said in an email to Reuters.
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