Coking coal is returning from the stratosphere.
The price of the steel-making commodity dropped 9 per cent on Friday to $263.4 a tonne after one of the industry’s biggest producers said it might lift a legal provision on coal sales in Australia.
Coking coal doubled in the weeks after a tropical cyclone battered the north east Australian state of Queensland, rising above more than $300 a tonne. High winds and heavy rains wrecked rail line and cut access to get export terminals on the coast.
Speaking on Friday, Rag Udd the chief executive of BHP Billiton Mitsubishi Alliance, said shipments would quickly increase when the Goonyella – the largest rail network in the region – reopens next week. Trains have been unable to use the line because of a mudslide.
That, he said, would allow the BHP and its Japanese partner to lift a force majeure provision – a legal term for when a company is unable to meet contracts because of circumstances out of their control.
Mr Udd comments came after BMA said it would invest $200m on a new conveyor system to link two of its mines in Queensland.
By taking advantage of excess handling capacity at one mine, BMA says the new link will boost its coking coal output by 4m tonnes.
BHP is the world’s biggest exporter of coking coal, a 300m tonne a year market.