A surge in weather-related disasters in Australia could push global mining firms to overhaul supply contracts and rethink how bad weather will affect their operations and customers worldwide.
Climate scientists say a warmer world will cause greater extremes of weather and some scientists have pointed to climate change as factors in some of the weather disasters in Australia.
Miners needed to better assess the threats from floods, storms and droughts and include weather data and risks in mine management and commodity contracts, said Robert Milbourne, a mining and resources lawyer for global law firm Norton Rose.
"Contracts must now more accurately address the consequences of weather variability and non-delivery due to weather," Milbourne, a former senior counsel for Brazilian miner Vale told Reuters.
"Traditionally, severe weather disruptions would be deemed beyond the reasonable expectation of either party. If severe weather events gradually become more foreseeable due to meteorological forecasting capacity, then that forecasting (and planning) capacity will need to be reflected in transactions," he said.
A series of floods, drought and cyclones has badly disrupted mining in Australia, particularly in Queensland state, where coking coal miners have been hit by severe floods twice in three years.
The latest floods along Australia''s east coast, which began late last year, have led to 16 coal mines in Queensland covering total annual capacity of 94.3 million tonnes declaring full or partial force majeure.
FORCE MAJEURE
Force majeure is a legal let-out that enables miners to break or suspend sales contracts without penalty.
Australia is a leading coking coal producer and Queensland produces 90 percent of the nation''s coking coal from miners including Anglo American Rio Tinto and BHP
Eastern Australia''s devastating floods would hit production at BHP''s coal mining operations for at least six more months, the world''s biggest miner said after output in Queensland fell by nearly a third in the last quarter.
Flood damage to mines and transport infrastructure will cost the Queensland government A$2.9 million a day in lost coal royalties for the rest of the financial year, which runs until June 30, a study by the Queensland Resources Council showed.
Droughts and cyclones can also be extremely disruptive, with iron ore mines in the northwest of Western Australia state vulnerable to powerful cyclones.
"The sequence and intensity of flooding and cyclones (in Queensland) has actually been down since the 1980s, so historically speaking they have had a pretty good run," said Queensland Resources Council spokesman Jim Devine.
But mining firms would not want to elaborate on risk management.