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.”