Chinese coal miner Yanzhou Coal Mining Co. (1171.HK) has resumed production at its Yarrabee mine in Queensland , Australia , after suspending operations for two weeks due to heavy rain, a company official said Tuesday.

Although the closure of Yarrabee mine cut coal output by 200,000 metric tons, the official, who declined to be named, said he expects higher coal prices to offset the lost revenue.

"The overall coal prices in Australia have risen by 15% since the middle of December because of the floods," he said. "We expect our Australia business to benefit from a rise in coal prices."

Heavy flooding in the resources-rich state has forced mining companies to shut down production, disrupting exports. It has been the region's worst natural disaster in decades.

The Yarrabee coal mine, which is located in Central Queensland's Bowen Basin, has been a wholly owned unit of Yanzhou Coal Mining since the Chinese company acquired Australia's Felix Resources Ltd. in December 2009 for A$3.54 billion.

The Yarrabee mine has a capacity to produce 1.7 million tons of PCI coal and thermal coal a year, according to the company's website. Pulverized coal injection, or PCI, is a process used to prepare coal for blast furnaces as a replacement for coke in the production of pig iron.

The coking coal will nearly double in price to more than US$400 a metric ton as months of wet weather on Australia 's east coast cuts into production from the world's biggest coal exporter, according to analysts' forecasts.

Coking coal, which is mixed with iron ore in blast furnaces to produce steel, is highly dependent on coal fields in Australia 's Queensland state that have been hit hard by flooding in recent months. The country supplies two-thirds of the most-valued hard coking coal traded in the global seaborne market.

Nomura said it expects Yanzhou Coal's average sales price of thermal coal and coking coal in Australia to rise by 29% in 2011 and by a further 9% in 2012.

"We like Yanzhou Coal as a pure play on our bullish view on coal prices given its expansion into Australia and high exposure to the local spot/seaborne market," Nomura said in a research report Tuesday.

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