Teck's coal marketing vice-president Real Foley said coal customers were concerned about the railway stoush in Australia. "I guess everybody is watching what may happen with Aurizon. So far Aurizon have said that the impact could be up to 20 million tonnes and half of that impact could be on the Goonyella line which is the line that carries mostly high-grade hard coking coal," he told investors in North America in recent days. "So it could definitely have an impact on the market from a supply point of view. We haven't seen major shifts from customers yet but it is definitely a concern." Hard coking coal miners have enjoyed a very profitable period of late, with prices for the steelmaking ingredient averaging $US187 per tonne over the past two years. For comparison, the commodity averaged just $US96 per tonne in the two years between April 2014 and April 2016. But weaker-than-expected demand from China over the past two months has seen the price fall by 32 per cent since the start of March to be fetching $US176.20 per tonne. At current prices BHP and Mitsubishi, who jointly run the world's biggest seaborne coking coal business, are still making more than $US100 profit margin on each tonne of coking coal exported from Queensland. Teck has traditionally sold about 30 per cent of its coking coal to Chinese customers, but has reduced that to about 15 per cent over the past year as part of efforts to sell more coal into growth markets like India, south-east Asia and even Europe where some long-standing mines are depleting. Teck chief executive Don Lindsay said the company had deliberately reduced its exposure to Chinese customers. "We didn't want to be exposed to too much Chinese commercial risk or volume risk and so we made the deliberate decision to cut our sales from that peak level (8 million tonnes per year) in half and now we are even below that," he said. "We like having the risk spread amongst different countries, different customers, it is just better diversification."
Australian rail freight company the Queensland Competition Authority has warned that up to 20 million tonnes per year of coal haulage capacity could be lost from railways serving Queensland Bowen Basin, due to regulatory changes imposed by Aurizon. The changes have limited the amount of revenue the Queensland Competition Authority can earn from the network. The company subsequently announced rail maintenance would now happen at fixed times, rather than to suit the convenience of miners, who have in turn threatened legal action. Canadian miner Teck previously capitalised on disruption to Queensland coalfields, and has warned the latest disruption will impact coal markets.