Xstrata cuts add to woes in coal industry
Glencore Xstrata has become the latest company to axe hundreds of coal-mining jobs in Australia as the industry battles weaker prices, high costs, excess supply and soft demand.
The global miner said it was forced to cut back coal production at its Newlands and Oaky Creek mines in central Queensland to "maintain viability in a challenging market". The production cuts would lead to a loss of about 450 jobs by the end of the year.
"This is a difficult decision, but one that needs to be taken in the current challenging economic conditions," Glencore Xstrata said on Thursday.
The cuts bring to more than 1100 the number of people set to be laid off by miners and mining services companies following announcements this week.
Coal producer Peabody Energy said on Wednesday it would slash 450 contractor jobs in Queensland and NSW, while Glencore Xstrata said it would cut 46 staff at its Ravensworth mine in the Hunter Valley.
Mining services company Downer EDI was set to axe 185 employees at the Goonyella Riverside coalmine in central Queensland. In April, Downer EDI cut 106 jobs at Japanese oil trader Idemitsu's Boggabri coalmine in NSW.
"Thermal coal markets at the moment are going through a major sea change," Fat Prophets resources analyst David Lennox said. "We are seeing other types of commodities, particularly renewables, starting to impinge on what would have once been the whole domain of the thermal coal and base-load power and electricity generation."
Thermal coal prices are down more than 20 per cent in the past year, while coking coal prices are more than 40 per cent down from the peak during the Queensland floods two years ago.
Oversupply of poor-quality Indonesian coal has also pressured steaming coal prices.
The Australian government's Bureau of Resources and Energy Economics downgraded its export earnings estimates from $186 billion to $177 billion for 2012-13 in its June quarterly report, released on Wednesday.
The bureau said thermal coal prices had declined from $US91 a tonne free-on-board Newcastle in the March quarter to about $US85 a tonne in June 2013.
Mr Lennox said with the market undergoing a "fundamental valuation change", mines around the globe were having to look at their cost structures.
Anglo American chief executive Mark Cutifani said on Wednesday that almost 9000 mining jobs had been axed in NSW and Queensland over the past year.
"It does look pretty grim, certainly for the thermal coal industry," Mr Cutifani said.