Queensland woes will support coking coal prices BHP Billiton's decision to declare force majeure at mines in Queensland, which produce about one-fifth of the world's seaborne coking coal, could help underpin prices for the commodity while demand from steel mills in Japan and other key markets remains subdued. The BHP Billiton Mitsubishi Alliance told customers on Monday that it might not be able to honour contracts from its seven mines in the Bowen basin because of recent heavy rains and months of industrial action. For more than a year the 50/50 joint venture has been trying to negotiate a new "enterprise agreement" that covers issues such as work schedules and training with three unions who are thought to represent one-third of a 10,000 strong workforce. But they have been unable to reach an agreement. Discussions broke down again last week, triggering a week-long strike by workers and BHP's decision to declare force majeure at the mines. Analysts estimate heavy rains and industrial action have resulted in about 2m to 3m tonnes of lost production for BMA since the labour unrest began 10 months ago. BMA primarily produces premium hard coking coal, which has fallen 6 per cent this year and trades at about $210 a tonne in the spot market. But because the market for coking coal is nowhere near as tight as early last year, when production in Queensland was halted because of heavy flooding and prices were pushed to a record $330 a tonne, analysts say it is difficult to see the BMA's dispute having a big impact on prices, unless there is prolonged industrial action. Macquarie Securities said: "This will certainly have some impact on market sentiment; however, most core customers [Japan, South Korea and Europe] remain relatively subdued in terms of steel output, thus any movements in price are expected to be limited." However, Glyn Lawcock, mining analyst at UBS in Sydney, said it depended on how long the situation in the Bowen basin lasted. The unions and BHP have a lot to play for. Neither side will want to give in easily. Australia's coal industry is more heavily unionised than other sectors such as iron ore or natural gas. Whatever happens in this dispute will set a standard for other discussions between workers and large mining companies. The dispute could come to a head later this month when BMA holds an employee ballot on its latest offer. If workers vote against the deal, union officials believe BMA may try to force workers back to the table via a "lockout." Qantas, Australia's flag carrier, used a similar tactic with the unions last year when it grounded its entire fleet, forcing the government to intervene and refer the dispute to an industrial relations tribunal. Goldman Sachs analyst Christian Lelong, said: "The next moves by the unions, together with the outcome of a ballot vote that BMA intends to hold at the end of April, are likely to determine the extent that this new round of industrial action drives market fears of tightness in premium coking."