Coal news and updates

Peabody orders cuts in Queensland as coal price slump bites

US coal giant Peabody Energy will axe up to 210 jobs and cut production at its North Goonyella coking coal mine in Queensland in the face of prices that have slid to 10-year lows.

St Louis-based Peabody said it would cut 1.5 million tonnes of annual coal capacity, resulting in the loss of up to 40 per cent of the mine’s jobs.

A spokesman said between 35 and 40 per cent of the 525 jobs held by employees and contractors at the mine would go.

As reported in The Australian last week, prices of exports of Queensland coking coal — used to make steel — have slid to 10-year lows of $US85 a tonne because of reduced Chinese demand, defying industry predictions it had bottomed at about $US105 last year.

Industry and analysts say more production cuts are needed to balance the market.

“The modified production plan is designed to lower costs, improve cash flows and increase productivity, while preserving high-quality hard-coking coal reserves for sales when markets improve,” Peabody said.

“Over the next month, the mine is expected to transition to one production shift per day, with associated employee and contractor reductions of 35 to 40 per cent.”

A prolonged dive in prices has been forcing miners to move beyond just cutting costs, their first line of defence in hard times. Major coking coal suppliers, including Glencore and Canada’s Teck Resources are also reducing production, blaming the chronic global oversupply of coal.

China’s appetite for coking coal is diminishing, deepening a market downturn miners say is the worst in recent memory. The price of steelmaking coal shipped from Australia, the world’s biggest exporter, has fallen 23 per cent this year to roughly $US86 a tonne, its lowest level in nearly a decade. The slide extends a decline begun in 2011, during which the fuel’s value has slumped by around three-quarters.

source: http://www.theaustralian.com.au