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.”

http://www.dailymercury.com.au/news/low-price-oversupply-is-coals-double-whammy/2404891/

Towns treated like mushrooms

THE Central Highlands have been left in the dark by mining companies.

After BMA announced that 700 positions would be cut from its seven Bowen Basin mines, Moranbah families and businesses are clambering to recover and adjust to the devastating news.

Moranbah Traders Association president Trehan Stenton said mining companies were happy to be well served by the region in the boom times but the lack of transparency made recovering for job cuts difficult.

“BMA are not giving any information about the nature of the workforce that will be cut,” Mr Stenton said.

“Mining companies need to engage with the community to at least work on a plan for the future.”

Mr Stenton said the state and federal governments needed to unlock funding to help local businesses transition from a reliance on the mining sector to industries such as service and agriculture. “We need short-term help for the wider community,” he said.

Isaac Regional Council Mayor Anne Baker said the job cuts would devastate the region

“The majority of these job losses are coming from BMA’s residential mines in our region, which directly impacts our communities,” she said.

“With six BMA mines is Isaac, many of these job cuts will affect Isaac residents.”

Ms Baker said the cuts would significantly affect every aspect of the communities.

Moranbah, Clermont and Dysart are expected to the most economic damage, with the majority of mine workers under threat living in those towns.

Union representatives used the announcement to launch an attack on BHP Billiton.

Construction, Forestry, Mining and Energy Union general secretary Andrew Vickers said the union was also seeking information about the jobs targeted in the cuts.

“BHP is demonstrating a horrifying disregard for jobs and for the future of central Queensland,” Mr Vickers said.

“BHP has profited enormously from central Queensland resources over many years, but they are showing their true colours as a ruthless multinational corporation.”

On Tuesday, BMA Asset President Lucas Dow said the “stubbornly” high Australian dollar and low coal price were drivers behind the review.

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

More mining job cuts in Bowen Basin, fears unions

The announcement of Rio Tinto’s job cuts at its Clermont coal mine may be the first in many for operations in the Bowen Basin, mining unions say.

It comes after Rio announced it would be cutting jobs at its relatively new Clermont coal mine last week.

A Rio spokesperson has stated that “a review is underway and although the details are to be worked out, it will unfortunately mean redundancies will be required.

“We do not take this decision lightly and are committed to keeping our employees informed and proving support to those affected.”

However since then the miner has clarified its statement, saying that its “coalface workforce”, as well production and maintenance crews, will not be touched, according to The Morning Bulletin.

With around 900 working at the mine, 400 fit into the ‘support staff’ category.

Rio has previously said it will be slashing its administrative costs by about 10% globally.

This has not satisfied the CFMEU, who say Rio may only be the first domino to fall in the region, stating that other mines are most likely to follow suit and cut jobs, the ABC reports.

“If Rio Tinto are doing theirs then obviously Xstrata and others who are also in the thermal game will be looking at what they may do next,” CFMEU district president Steve Smyth said.

“Rio, whether or not they’re doing it because … profitability’s gone out of the market or they’ve got some issues I really don’t know, but it certainly will make other thermal producers sit up and think and obviously in the Galilee Basin as well.”

Mining unions will now closely watch how other operations within the region will handle the thermal coal price drop.

“If you’ve got Rio Tinto, them as a multinational laying people off, and then you’ve got these huge mega mines that are going to start in the Galilee Basin, you have to question how viable they’re going to be and what else is going to happen to the thermal coal industry in Queensland,” Smyth said.

http://www.miningaustralia.com.au/news/more-mining-job-cuts-in-bowen-basin-fears-unions