Cyclone Debbie is zeroing in on major Australian coal mines

Matt Cardy/ Getty Images

Cyclone Debbie, a monster category 4 storm, is currently barrelling its way towards the Queensland coast.

It’s expected to make landfall around midday local time, and if Australia’s Bureau of Meteorology is on the money, it could leave a lasting impact.

Packing sustained winds of 175 kilometres per hour near the centre of the storm, and with wind gusts of up to 250 kilometres per hour, it’s expected to dump a lot of rainfall.

Here’s the latest Tropical Cyclone advice issued by the Bureau:

Areas of heavy rain with the potential to cause severe flash flooding have developed around the Central Coast and Whitsundays district and are expected to spread to other parts of the northern and central Queensland coast and adjacent inland areas today. Widespread daily rainfall totals of 150 to 250 mm, with isolated event totals of 500 mm, are also likely to lead to major river flooding over a broad area this week, and a Flood Watch is current for coastal catchments between Rollingstone and Gladstone, extending inland to the Upper Flinders, Thomson and Barcoo catchments.

Given that expected rainfall total, it has the potential to not only impact the immediate region but also the Australian economy as a whole given it’s major source of supply for Australia’s second largest export item by dollar value, coking coal.

Vivek Dhar, mining and energy commodities analyst at the Commonwealth Bank, explains:

The coal loading ports of Abbot Point, Dalrymple Bay and Hay Point have already halted operations, while coal rail services on the Goonyella and Newlands systems have also been suspended. The Bowen Basin looks most vulnerable to flooding given the cyclone’s path. The basin accounts for nearly 60% of global seaborne coking coal exports and 6% of global seaborne thermal coal exports. If the cyclone damage is limited to the railways and port only, we expect the disruption to supply to only be limited. However, the delays could be longer if the coal mines are flooded.

Given the potential for a prolonged supply disruption, that raises the risk that it may also drag on Australian economic growth, mirroring what happened in the March quarter of 2011 when Cyclone Yasi contributed to a sharp drop in export volumes, dragging Australian GDP sharply lower.

Some, such as Justin Fabo on Twitter, suggest a similar scenario could eventuate on this occasion.

Despite the prospect of sustained seaborne supply disruptions, Chinese coking coal futures tumbled in overnight trade, closing down 6% at 1,119 yuan per tonne, the lowest level since February 13.

That’s unusual given the circumstances, and raises the risk of a reversal should Debbie leave a lasting impact on production.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.