Rio Declares Force Majeure On Coal Sales After Floods

Rio Tinto Group, the world’s second- biggest mining company, declared force majeure on contracts to sell coal from its Kestrel mine in Australia after flooding from ex-tropical cyclone Oswald damaged a rail system.

The Blackwater rail network, which carries the second- largest tonnages in Queensland state, may be closed for as much as 10 days starting Jan. 29, Aurizon Holdings Ltd. (AZJ), the network operator, said today in an e-mailed statement. The line, which transports coal to the state’s port of Gladstone, was closed on Jan. 26, according to Aurizon.

Floodwaters have left six people dead, disrupted mining operations and damaged sugarcane fields in Queensland. Xstrata Plc (XTA), the world’s largest exporter of thermal coal, declared force majeure on Jan. 29 because of damage to the rail line. The clause is invoked by companies when they miss shipments because of circumstances beyond their control.

Rio is monitoring updates from its service providers regarding the expected duration of rail repairs, the company said in a statement on its website yesterday. All sites managed by the company are operating and working toward normal production, it said.

One of two coal-ship loaders at the port of Gladstone resumed operations on Jan. 27, an e-mailed statement from harbor authorities said on Jan 29. Kylie Lee, a spokeswoman for Gladstone Ports Corp., didn’t immediately respond to a phone message and e-mail seeking comment about loading operations.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net;

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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