150 locals not FIFO workers to benefit from Stanmore plan

FIRST in line for the 150 jobs created at a new Stanmore Coal mine will be workers from Moranbah and Mackay.

On Wednesday news broke that the Isaac Plains coal mine 6km east of Moranbah would reopen in February.

Gladstone-based Golding Contractors was awarded its contract late Wednesday afternoon and principal mining engineer Dylan Pieters said it would look to employ “those living closest to the mine”.

“To get a mining contract in this current market is a really good thing,” Mr Pieters said.

“We want to employ people where the mine is at and we’ve already started advertising some of the positions.”

But he said the bulk of the new jobs would be advertised soon, through seek.com and the company website.

Stanmore Coal’s managing director Nick Jorss said the company would not employ FIFO workers “because it did not suit the business model”, particularly with the mine on track to be one of the world’s lowest-cost metallurgical coal mines.

He planned to reduce the cost of production for each tonne of coal by around 35% compared to the mine’s previous performance.

Buying the mine for just $1 in July was a major cost-saving but Mr Jorss said it would also change its operation method.

“The model is definitely changing,” Mr Jorss said.

“We are changing the method and maximising the amount of dragline.

“Moving overburden with dragline reduces costs.”

More than $7 million in royalties, in addition to state and federal government taxes, would flow back to the state.

After the mine reopens in February Mr Jorss said the first coal shipments should leave in April, en route to Japan, Korea and Taiwan.

He hoped the mine would have a 10-year lifespan.

During that time it would set aside $32 million for the rehabilitation of the mine site.


Moranbah’s housing market collapses, businesses struggle as coal prices remain depressed

The coal boom is over – that’s the verdict of businesses in the mining town of Moranbah in northern Queensland.

At the height of the mining boom, Moranbah real estate agent Bella Exposito did not have a rental property to spare.

The town, which was literally built on coal in 1971, was experiencing unprecedented demand for housing as workers and their families flocked to the region.

Even decades-old weatherboard homes were selling for upwards of $600,000 while tenants could expect to pay $1,800 per week for a roof over their heads.

But now it is obvious the good times have well and truly come to an end.

“Prices have changed dramatically,” Ms Exposito said, pointing at a three-bedroom home on leafy Leichhardt Street.

“They bought it for $800,000. It’s now only worth $200,000.”

As values fell, the vacancy rate climbed and there are now 300 empty rental properties in Moranbah.

Ms Exposito said she had never seen anything like it in her 27 years in the business.

“I have five houses myself and they have been empty for two years,” she said.

A string of recent announcements on job cuts and mine closures is likely to make matters worse.

Axe falls on jobs in the region

The biggest employer in the region, BHP Billiton Mitsubishi Alliance (BMA), is planning to axe 700 positions from six local coal mines.

Hundreds more could be without work when Brazilian miner Vale and Japanese trader Sumitomo cease production at Isaac Plains by January.

This week, Prime Minister Tony Abbott officially opened BMA’s Caval Ridge coal mine and said that coal was “good for humanity”, boldly declaring it had “a big future”.

But the Caval Ridge project is staffed by fly-in, fly-out workers who typically do not spend their money in the town.

If business did not improve, local baker and long time resident Steve Hanvey said he would be forced to close down by Christmas.

“This shop relies on residents coming in and buying our bread, rolls, cakes and pies,” he told 7.30.

Every morning, before the sun has come up, Mr Hanvey loads his delivery van with fresh bread to be delivered to workers camps around Moranbah.

There used to be nearly 1,000 hungry miners to feed at each camp, but numbers have dwindled and many mining companies now prefer to source their bread from the coastal cities of Mackay and Rockhampton.

“We’ve got two delivery vans. We’re down to one van doing only one trip each morning,” Mr Hanvey said.

“We’re down to four staff and it’s getting to the stage where I need to be making some decisions shortly about the number of bakers that we’ve got.”

Companies seek to address market oversupply

Prices for both metallurgical or coking coal, used for steel production, and thermal coal, used for electricity, have plummeted since 2012.

Most analysts attributed the fall to oversupply rather than weakening demand.

In fact, demand for Australian coal is increasing, according to the mining lobby and a leading consultancy firm.

Queensland Resources Council chief executive Michael Roche said India was set to triple coal imports.

The demand across Asia is enormous at the moment. We don’t see a slowdown in demand over the next 20 years.

Chris Urzaa

“Australia’s going to be a big source of that coal,” he told 7.30.

“Nobody has actually found a way of making steel without coking coal and we’re the world’s biggest exporter of coking coal.”

Director of commercial services at HDR Salva, Chris Urzaa, said Asia was a “bright spot” for thermal coal producers too.

“The demand across Asia is enormous at the moment,” he told 7.30.

“We don’t see a slowdown in demand over the next 20 years.”

Mr Urzaa said low coal prices were the result of the market being oversupplied.

“It made so much sense to produce every single extra tonne of coal that you could during the boom years because you were making so much money,” he said.

Now the boom years are over, Mr Urzaa said mining companies were trying to correct the oversupply by slowing down production.

“There are a lot of shutdowns going on in the coking coal space,” he told 7.30.

“Those shutdowns are bringing the market back into balance much quicker.

“We expect coking coal to come back into balance in 2016, but we believe thermal coal will come back in 2015.”

In the meantime, exporters are being hit hard. A recent survey by HDR Salva revealed a third of all Australian coal exporters were trading at a loss due to the low prices.

Families contemplate their future in Moranbah

At a crowded park full of mothers and their children, Moranbah Mayor Anne Baker is reminded of her hope for the town.

“We need to have permanency and people living in the community,” she said.

Moranbah’s population has always fluctuated in sync with the coal mining industry, and the latest downturn could force more residents to leave.

“It’s not a new risk, which is why I say people need to learn from the past,” she said.

“I’m asking for [mining companies] not to have such a slash-and-burn approach.”

Natalie Oram moved to Moranbah with her family last year, and while it took some getting used to, they have come to love the area.

The town has, however, become considerably quieter since they first arrived and the possibility of further job cuts weighs heavily on their minds.

“People are going to have to move if they’re going to lose their jobs because that’s what brings you here,” she said.

“My husband’s still got his job, so we’ll just have to see what happens.”


Low price, oversupply is coal’s double whammy

AN INDUSTRY analyst has blamed factors in addition to a low coal price for the closure of Isaac Plains Coal Mine.

CQUniversity senior lecturer in management and organisational behaviour Paul Weight said there were two reasons for yesterday’s announcement.

“One of them is certainly a drop in the coal price,” he said.

“The second one is an oversupply of coal.

“Australia isn’t the only country that produces coal. We have to compete with the coal coming out of Indonesia, South America, Siberia and more.

“If you are running a coal mine in Indonesia, for example, it costs a lot less than it does in Australia.”

Mr Weight said mining companies could have been managed better to prevent losses.

“One of the things mining houses can do better is to run their companies in a much more lean fashion,” he said, “whereby they always have an eye out on expenditure and cost.

“When companies are making a lot of money, many are bedding out and employ more people that they don’t really need.”

However, Mr Weight said there was no easy solution in economically challenging times.

“Most of the mining houses are international companies, with many mines,” he said.

“If a mine becomes uneconomical, they’ll just close it down and open it again when the coal price recovers.”

Mr Weight said there was a glut of coal in the market.

“China stockpiled coal during the financial crisis and is not buying as much now,” he said. “The value of coal is reducing. When coal cost $120 a tonne things were great, but at $85 or $90 a tonne it’s not viable.

“The bottom line is when the price of coal is less than what it costs to get it out of the ground, it’s not a viable project.”


Fears house prices will be hit hard

THE announcement Isaac Plains Mine in the Bowen Basin will close early next year has put property investors on edge.

Moranbah real estate agent Geoff Williams said consumer confidence in the town had dropped.

“There are a lot of investors here who are really hurting badly,” he said.

Current Moranbah house prices were similar to prices in 2004, Mr Williams said.

“The average house price is in the vicinity of $400,000 to $420,000.

“This is unusual for the last two years, but historically Moranbah house prices have always gone up and down.

“Prices were held up because there were some really good quality investments.”

News of the mine closure came just days after BMA announced it would be cutting more than 700 jobs in its Bowen Basin mines.


Flow-on effect in Mackay

CLOSURE of the Isaac Plains coal mine will have a flow-on effect on businesses in the Mackay region, the Resource Industry Network has warned.

General manager Julie Boyd said mining contractors would be the worst hit.

“In the current circumstances we are seeing a very low coal price,” she said.

“This has left many contractors in a difficult financial position.

“It certainly will have a flow-on effect in the region.”

Yesterday’s announcement to close the mine was a blow to Leighton Holdings.

The mining contractor was one year into a three-year contract at the site.

The company was unavailable for comment.

Brisbane-based firm Ausenco was responsible for the operation of the Coal Handling and Preparation Plant at the site.

An Ausenco spokeswoman said she did not expect the closure of the mine to have a material impact on the company.

“At this point we are still working through the details of the transition with Isaac Plains Coal Management,” she said.

“We will work closely with our employees to support people whose roles become redundant as a result of this change.”


Coal miners confident on recovery

For two years, the world’s coal miners have been plagued by a glut of the fuel that has battered prices and led to the closure of mines, straining tiny towns from Australia to South Africa reliant on their operations.

Now, some of the largest shippers are signaling the worst may be over as prices stabilise.

Coal mining executives say a string of pit shutdowns should finally kick-start the market by curbing supply, while demand from buyers such as China and India appears to be picking up. The optimism is a reversal from past months when companies warned of a sustained market surplus, although they are stopping short of tipping a sharp rebound and see any recovery as gradual.

Coal is one of the world’s most important energy products and is the biggest source of electricity generation, supplying about 40 per cent of global needs, the International Energy Agency says. For a country like Australia, which counts coal as its second largest export after iron ore, coal is an important source of jobs and revenue.

Paul Flynn, chief executive of Whitehaven Coal, says he has turned more upbeat on the market’s prospects in recent months. The company, which sells coal to countries such as Japan, China and India, reported a second annual loss last week as low prices hurt revenue, but Mr Flynn says he sees the potential for a return to profitability in the year ahead.

“We certainly feel better about the prospects for coal,” Mr Flynn told The Wall Street Journal. “It’s been a very, very difficult environment, but I see signs that the oversupply situation is tightening up now, which is good.”

While spot prices are yet to enjoy much of a lift, having largely flattened over the past month, miners are benefiting from the renewed enthusiasm. Whitehaven shares have rallied 37 per cent since the start of July, while Indonesian producer PT Adaro Energy is up 12 per cent.

Supply rose more quickly than demand over the past couple of years, as mines that were planned when the market was booming moved into production. Glencore says thermal coal shipped by sea rose 22 per cent between 2011 and 2013, outpacing demand, which rose 18 per cent.

As a result, the price of thermal coal, which is used to generate electricity, has been trading near its lowest level in five years. Metallurgical coal, a steelmaking ingredient, is near its lowest in seven.

This has hit the balance sheets, even of diversified miners. BHP Billiton, the world’s largest miner, said weaker coal prices wiped $US1.5 billion ($1.6bn) off its underlying earnings last fiscal year.

Some miners have closed their most expensive pits, contributing to more than 10,000 jobs cut in Australia’s coal sector. Towns that rely on coal mining for employment and spending, such as remote Moranbah in Queensland, have seen their populations shrink and housing markets crash as workers were laid off.

But the world’s biggest shipper of thermal coal, Glencore, expects demand for that fuel to start outpacing supply again from 2015, shoring up prices. “They seem to have bottomed, stabilised, [and] improved a little bit in recent periods,” Glencore Chief Financial Officer Steven Kalmin said in a presentation to investors in August.

Analysts expect a rise in Indian thermal coal imports — after lower-than-usual monsoon rains led to weaker hydropower generation — to send prices higher. Citi analyst Ivan Szpakowski also forecasts a lift in Chinese industrial activity toward the end of the year, which he thinks will drive up demand.

Buyers in China and elsewhere are also looking to switch to higher-quality coal that generates lower emissions and meets environmental targets. This is a plus for Australia with its abundant reserves of high grade coal. In contrast, miners with low quality reserves or high costs could face continued challenges and be forced to cut output further, analysts say.

Production cutbacks could spark a recovery in metallurgical coal. Whitehaven estimates 20 million tonnes of output has been cut in the past few months alone.

Another jolt for the market has been a decision by India’s Supreme Court in August to rule all coal-mining licenses distributed since 1993 illegal, raising uncertainty over supplies that could prove a positive catalyst for prices, Mr Flynn said.

Even with all its mines in operation, India is a big buyer of foreign coal because of rising power-generation demands.

“There is an urgent need in India to add significant capacity generation in a short time frame. This generation will largely be coal-based,” Anil Sardana, managing director of Tata Power, one of India’s largest integrated power companies, said.

Citi’s Mr Szpakowski said he recently told clients to buy Australian thermal coal futures as Indian imports were poised to increase, Chinese demand was going to rise and supply would fall in the coming months.



Carmichael coal to hire 5000 in construction phase

Carmichael mine developers Adani are now taking expressions of interest from people wanting work in the mining industry.

The indian-owned company said it plan on hiring 5000 people during the construction phase, with the first round of workers to be hired next year, double the estimates made when approval for the mine was announced.

The company has encouraged people to submit their details now at the Adani Mining website.

A spokesman for Adani said the company would favour local people from the Mackay and Whitsunday areas.

“As part of our local procurement policy, we will also maximise Australian participation by sourcing, where possible, from regional Queensland and Australian businesses,” he said.

“We recognise the need to make a positive contribution to the communities in which we operate.

The project will be hiring for coal exploration, coal mining, rail construction and operations, infrastructure construction, and port expansion and operations.

QLD mining ghost towns predicted as workers on the move

A mining communities advocate has lashed out at the Queensland government, claiming a lack of support will see regional mining centres turn into “ghost towns” as workers leave to secure FIFO jobs.

Former state politician and Central Queensland Coal Communities advocate Jim Pearce claims mine workers are leaving regional towns at an alarming rate so they can be considered for work at the 100 per cent FIFO workforce at BMA’s Caval Ridge mine, Daily Mercury reported.

Pearce said the state and federal governments should “hang their heads in shame” for allowing BMA to opt for a wholly FIFO workforce at the mine and says people are leaving their homes and moving to different postcodes in the hope of securing work.

“This is the history of the industry in reverse,” he said.

“People used to move from the coast to the coal towns to have a job and a nice home and a great town to live in and now those vibrant populations will become ghost towns. Who would want to live in a community where they have a high risk of not being able to retain a job just because of the policies of the industry?”

BHP’s decision to use a 100 per cent FIFO workforce instead of hiring from inside the local Central Queensland community, enraged locals, the unions as well as the wider mining community at large early last year.

It was hoped that BHP would source the 1000 employees needed for the project from the surrounding areas of Moranbah, Dysart, Mackay and Rockhampton but instead workers will be flown in from Brisbane and Cairns.

President of the Moranbah Traders Association, Peter Finlay, has previously said local residents should have the opportunity to apply for jobs in their own community.

“It’s seven kilometres from the post office and if you want to work there you can’t have an address in Moranbah – how stupid is that?” he said.

Pearce agrees, describing BMA’s decision as “bad policy”.

“There’s a huge burden on infrastructure, roads and communities along the east coast and all this is adding to it,” he said.

“I think it’s about time the people of Queensland and people with some authority started to ask the questions why mining companies prefer to have FIFO ahead of a sustainable existing community. The reason is because they get tax concessions for constructing mining camps.”

Pearce called on the state and federal governments to take a serious look at the situation.

“Taxpayers, mining companies and the government have put a lot of money into building these mining communities; that’s why we need to use them.”

An enquiry into the effects of FIFO workforces on regional towns was released last year, making 21 recommendations including better resourcing communities under pressure from large FIFO workforces, removing tax benefits for companies using transient workforces, a study into the impact on communities and the development of a housing strategy.


China to regulate higher coal import standards

Australia produces higher quality thermal coal than its export competitors, a point of difference that will see the struggling sector benefit if China pushes ahead with plans to lift import standards.

According to reports from news agency Platts and The Australian, draft regulations have been released to the local coal industry by China’s National Energy Administration banning the import and domestic delivery of poor-quality thermal coal.

The regulations which ban coal with a net calorific value of 4540 kilocalories per kilogram or less, would favour Australian coal at the expense of our main coal competitor Indonesia.

But it doesn’t take out coal players like Russia and America who also produce high quality coal at a cheaper price.

Russia also has the added benefit of lower transport costs, being able to utilise rail haulage to move large quantities.

Some analysts say there is also a chance Chinese domestic production could fill the void.

Macquarie Bank said that while this measure has been floated before, domestic coal producers were supportive and previous concerns raised by utilities now appear to be silenced.

“If executed, this legislation could be the market-changing catalyst thermal coal has been desperately seeking,” Macquarie said.

“Implementation in some form is probable rather than possible.”

The move to regulate quality standards is thought to be driven by rising pollution concerns, and a desire to protect the profits of large Chinese coal producers from lower-priced imports.

NSW and Queensland black thermal coal exports generally have an energy content above 5500 Kcal/kg, which compares favourably to Indonesian coal which has an estimated range of between 4200 and 5200.

Macquarie said if the regulation measures go ahead, about half of Indonesia’s coal exports or around 50 million tonnes could either flood other markets or be forced to slash production.

Under the terms Australian coal would potentially be required for blending with Chinese domestic coal which would have a positive impact on prices.

Recently Australia’s coal industry has been under mounting pressure, struggling to compete with lower production cost countries, resulting in jobs being slashed across the NSW and QLD coal districts.

Earlier this year Australian Mining reported the country’s coal sector continued to battle increasing operation and labour costs, facing strong international competition and a stubbornly high Aussie dollar, which this week has dropped below parity delivering bigger miners some relief.

Nikki Williams, CEO of the Australian Coal Association, said earlier this year that the Australian coal sector is at “a terrible junction where not only has the international market come off in terms of prices, but our costs and productivity have gone to a terrible place”.

It was only five years ago that Australia was considered one of the most economical places to produce coal in the world: At the start of 2013 Australia was labelled a high cost producer at $176 a tonne; at the time the rest of the world was sitting at around $106 a tonne.

Late last year American coal conglomerate Alpha Natural Resources even credited Australia’s rising costs for the US’ boost on the global coking coal market.

“The fact is that their cost inflation has been so rapid that it is actually improving the US’ relative position in the global seaborne metallurgical market,” the group’s vice-president of investor relations, Todd Allen, said at the time.

Allen said that recent cost inflations have far outstripped that of the US and Canada, attributing the rising costs to changes in federal and state government regulations and the inflated cost of labour.

Macquarie said that in the short term the direct price effect from Chinese regulation changes wouldn’t be seen but the end result should benefit higher quality coal producing countries like Australia.

“In addition, it helps raise the prospect for further Chinese investment in higher-quality overseas assets, just at the same time as the Koreans are taking the same approach,” the company said.


New Qld coal mine means more jobs for Aussie workers

A MASSIVE mine development near Moranbah will need hundreds of workers in the next three years, as it prepares to export coal for almost half a century.

The Eagle Downs underground project from Aquila Resources has been under construction since September 2011 but will not need the majority of its labour until next year.

When that happens, Aquila and Brazilian joint-venture partner Vale will require up to 500 workers to build plants and infrastructure on the site.

Once finished, the Perth-based firm will seek almost 400 more workers to run the mine.

Eagle Downs is projected to export an average of 4.5 million tonnes of metal-making coal per year for the first decade of mining, with the ability to hit 8 million tonnes per year after a major expansion.

It would export through the planned Dudgeon Point coal terminal near Mackay in Central Queensland.

Aquila general manager of coal Stephen Pilcher told APN industry conditions were turbulent, but it was “not a bad time to be constructing a coal mine”.

The firm was saving money by hiring workers left in the cold by other mining companies looking slash costs.

Coal prices too may prove less of a concern for Aquila with the miner able to turn a profit even if export coal prices remain stagnant.

HSBC Bank suggested this week that while China’s manufacturing levels were not growing as quickly, they were still growing, meaning demand would remain for Australian minerals.

The size and scale of Eagle Downs is comparable to the Caval Ridge project from BHP Billiton Mitsubishi Alliance – projected to mine 5.5 million tonnes of coal per year for three decades – and Anglo American’s Grosvenor mine, projected to export 6 million tonnes over 26 years.

For now, Aquila has about 40 workers on site but that would increase to 70 within the next 18 months.
After that, worker numbers will ramp up.

“The peak workforce won’t be there until 2014 or 2015,” he said.

“We’re talking 400 to 500 people at that time.

“(Once operating) it will be between 350 and 380 people, including permanent employees and contractors.”

Eagle Downs will begin exporting samples of its coal in 2015, increasing to full production from 2016.


New coal mine in QLD set to create 400 jobs

A new coal mine to be built in Central Queensland is expected to create more than 400 jobs when construction starts next year.

Carabella Resources major open-cut Grosvenor West development project, west of Moranbah , is expected to make a final decision about the $500 million investment late next year, The Observer reported.

Once underway, Carabella expects to export up to 3.8 million tonnes of coal.

The company is yet to finalise its power, water, rail and port services but it is believed it will want to access part of the planned Abbot Point coal terminal expansion.

An environmental impact study will now be comprised for the Queensland Government and is due by October 2014 but the company says it hopes to have all approvals finished by then and for construction to be underway.

In the company’s 2012 annual report, chairman Andrew Amer said that the company was looking at ways to reduce that capital cost of the new mine.

“The project proposes the use of bucket wheel excavator systems and truck/ excavator units. This configuration along with contractor mining resulted in a significant reduction in the capital required for the project and competitive operating costs,” he said.

Managing director Anthony Quinn said the location of the mine held many advantages.

“They key attractions of Grosvenor West are its high quality coking coal, attractive geology and strategic location within one of the world’s best coking coal basins”.


Anglo American to cut Moranbah North jobs

Anglo American will cut at least 50 jobs when its Moranbah North mine reverts back to a single longwall operation.

It comes on the back of a rash of coal mining job cuts across the Bowen Basin.

Earlier this month BMA, Rio Tinto, and Xstrata all announced they will be reducing their workforce.

BMA recently cut 100 employees from the contractor workforce at its Gregory Crinum coal mine in Queensland.

It has also halted expansion works at its Peak Downs coal mine.

Rio Tinto has cut 70 contractors from its Kestrel-KME operation, as well as slashing positions at its Clermont mine and closing its Blair Athol operation; Xstrata will be cutting contractor numbers on its coal mines but refused to detail how many workers would go or which sites would be impacted.

BHP CEO Marius Kloppers this week said it was part of a “broad industry movement” toward cutting jobs on Queensland coal developments.

Now Anglo American has joined the other major with its announcement it will cut positions, the Daily Mercury reports.

It comes as the mine reduces its operations from two down to a single longwall.

Due to this it will reduce its workforce, and has called on some workers to take voluntary redundancy.

An Anglo spokesperson told the Daily Mercury the decision was made “in light of recent market conditions and declining coal prices”.

“This … will reduce workforce and contractor activity across the mine,” she said.

“We are currently conducting a review of business requirements for the new operating environment.

“As a result of the operational changes, Moranbah North mine announced a voluntary separation process in which we have invited employees to register a non-binding expression of interest if, based on their personal circumstances, they would like to leave the business,” she said.

The CFMEU slammed the shrinking coal operations across the Bowen, stating that companies are cutting jobs because commodity prices have slumped.

[Anglo is] going to reduce operations from two longwalls to one longwall,” Smyth explained.

“That’s up to 50 jobs as a minimum. It could be more. They are not entirely sure because they are reviewing operations.”

There is no word yet as to how this will affect Anglo’s planned development of the Moranbah South and Grosvenor projects.

Source: http://www.miningaustralia.com.au/news/anglo-american-to-cut-moranbah-north-jobs