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Australian coal industry faces financial squeeze

The ongoing decline in thermal coal prices is hitting the financial strength of Australia’s thermal coal mining and mining services companies, according to credit ratings agency Moody’s, adding to the pressure on miners, already struggling with low prices across major commodities.

“China’s demand for thermal coal is declining amid the country’s slowing industrial production and push for cleaner energy sources, exacerbating the pressure on global coal prices and the resulting pressure on Australia’s mining industry” said Moody’s analyst, Shirley Singh, in a research note.

Much publicised cost-cutting initiatives across Australia’s mining industry have not fully offset the impact of the weaker prices, continued Singh, adding that miners have a very limited appetite for new coal investments as a result.

This has had a knock-on impact on the mining services sector with Moody’s downgrading all five rated Australian mining services companies over the past 12 – 18 months. The ratings agency retains a negative outlook on the sector as further downside risk remains.

source: http://www.worldcoal.com