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BHP suspends operations at 5 metallurgical coal mines due to Queensland cyclone

Singapore — The world's largest seaborne metallurgical coal producer and exporter BHP Billiton has suspended operations at five of its Queensland, Australia, coking coal mines due to cyclone Debbie, it said Tuesday.

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The mines are Goonyella Riverside, Peak Downs, Daunia (under a BHP-Mitsubishi alliance, BMA), South Walker Creek and Poitrel (BMC), a BHP spokesman told S&P Global Platts.

Met coal operations are still continuing, though at "reduced levels" at the miners' other assets at Broadmeadow, Caval Ridge, Saraji, the spokesman said. "Blackwater Mine near Emerald is not currently within the cyclone warning zone and is operating at normal capacity," he added.

"Assessments about resumption of operations will be made once the storm threat has passed," the spokesman said.

BMA's Hay Point Coal Terminal, which is the main export terminal for the company's met coal, remains closed.

Cyclone Debbie hit Queensland Tuesday and has resulted in a declaration of force majeure in Yancoal's Middlemount mine. There were four other reported cases of sites which were close to declaring or have already declared force majeure, also as a result of the cyclone.

The cyclone comes at a juncture where premium met coal prices has fallen from a high of $310/mt FOB Australia in November 2016 to $152.25/mt FOB Australia Tuesday for premium low vol coking coal, according to Platts assessments.

Prices quadrupled last year due to a combination of supply issues in China and Australia.

Premium hard coking coal is a product segment where BHP has the most significant production volumes. BMA's premium coal products account for 37% of the global seaborne supply of prime hard coals, according to Platts calculations. This is inclusive of Mozambique and North American premium coal product supply sources.

The miners' products are also most widely traded in spot market. BMA's premium coal products, which are sold by the producer or by traders, accounted for 66% of the 2016 spot market, according to Platts calculations.

BHP is also a significant player in the PCI segment, with its products accounting for 26% of the spot trades in 2016, according to Platts calculations, making them the second most widely traded after Peabody.

--Elizabeth Low,elizabeth.low@spglobal.com

--Edwin Yeo,edwin.yeo@spglobal.com

--Edited by Maurice Geller, maurice.geller@spglobal.com