The closure of the rail line between its Phosphate Hill operation and Townsville is set to cost Incitec Pivot at least $100 million.
However, other major North-West Queensland mining operations are faring better, as record numbers of heavy vehicles hit the local highway to keep the region’s mineral exports flowing.
While Incitec Pivot said it was able to take some of its product to Townsville by road, the fertiliser manufacturer will take a severe financial hit from the Mount Isa Line closure, with estimates that the outage will mean lost earnings of $100- $120 million.
Queensland Resources Council chief executive Ian Macfarlane said while IPL had disclosed the estimated impact of the rail closure on its bottom line, the overall impact on mining operations in the region was not as bad as people may expect.
“The mining industry obviously was impacted (by recent flooding) but compared to particularly the livestock industry, well, it was nothing like that,” Mr Macfarlane said.
He said resources companies were finding work-arounds, with measures including stockpiling and road haulage allowing them to keep mining.
Mr Macfarlane said an increasing number of the region’s miners had been using road transport anyway due to uncompetitive conditions on the Mount Isa Line.
“IPL have made a declaration to the market, but we are not aware of any other companies who have needed to do the same thing on that basis,” he said.
Phosphate Hill, 150km south of Mount Isa, includes a phosphate mine and a complex of plants that manufactured 850,400 tonnes of ammonium phosphates (fertiliser) last financial year.
Mr Macfarlane believed there was a good case for upgrading the rail line.
Queensland Rail has created a taskforce to lead track repairs following widespread flood damage and has flagged that the Mount Isa Line may be cut until mid-May.
In a statement in early March, Glencore said it was receiving guidance from Queensland Rail in relation to the timeframes of track repairs and was continuing to adjust logistics accordingly.
“Operations continue at our North Queensland copper and zinc sites in Mount Isa and Cloncurry and we plan to ramp up transport activities once the rail line to the Port of Townsville reopens,” a spokeswoman said.
“At this stage, we don’t anticipate any impact to our current 2019 production guidance.”
South32 said its Cannington mine had continued to operate during the recent flood events and had secured the trucking capacity needed to offset the loss of rail availability with minor additional logistics costs.
MMG also said it was continuing production at the Dugald River mine and had secured a fleet of trucks to transport concentrate in sealed containers to the Port of Townsville during the rail cut.
The Mount Isa Line would usually see more than 70 weekly movements transporting about 84,000 tonnes of freight in commodities such as copper, lead, zinc, phosphate, sulphuric acid, mining reagents, fuel, cement, general freight, and livestock, according to Queensland Rail’s latest annual report.
In addition to the rail cut, record rainfall and flooding during January and February caused extensive damage to many sections of the Flinders Highway, with the final stretch between Richmond and Julia Creek reopened to traffic on February 27 after being closed for 21 days.
The Department of Transport and Main Roads said record numbers of heavy vehicles were now travelling on the Flinders Highway.
The department had been working closely with transport industry stakeholders to ensure ongoing road access and continued movement of vital freight and resources from North-West Queensland, a TMR spokesman said.
Under normal circumstances, a mining company hauling more than 50,000 tonnes of minerals or petroleum/gas products per annum on a state-controlled road is required to submit a Notifiable Road-Use notification to TMR.
These notifications require a road safety and road impact assessment. Depending on assessment findings, the mining company may be required to mitigate impacts on road safety and/or contribute towards road maintenance costs.