BHP Billiton shares lift after it declares a force majeure on its Australian coal deliveries due to Cyclone Debbie damage

 
Courtney Goldsmith
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BHP is the world's biggest producer of coking coal, which is used to make steel (Source: Getty)

Mining giant BHP Billiton has declared a force majeure for coal deliveries from Australia's Bowen Basin due to damage from Cyclone Debbie.

Shares in the world’s biggest exporter of coking coal, which is used to make steel, lifted nearly three per cent following the news.

BHP said the rail tracks moving coking coal from the mines in Queensland state to ports had been damaged by landslides, causing disruptions.

The rail operator, Aurizon Holdings, has said it will take around five weeks to complete the repairs, and alternative routes are being considered.

BHP Billiton is the fourth firm in Australia to declare a force majeure, which means the firm cannot fulfil obligations because of outside forces. The term typically refers to natural disasters or accidents.

Read more: Rio Tinto agrees to sell its Coal & Allied unit to China's Yancoal

The cost of coking coal has shot up because of the disruptions. Chinese coking coal futures jumped more than seven per cent to a four-month high while Singapore futures grew as much as 43 per cent over the previous two days on fears the stockpiles held by steelmakers will start running low.

BHP was a top gainer on the FTSE 100 this morning, with shares up more than 2.5 per cent at 1,287p.

In February, the firm reported it had swung back to profit due to higher commodity prices.

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