Xstrata axing operator of loss-making Australia coal mine

SYDNEY Tue Feb 19, 2013 2:32am EST

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SYDNEY Feb 19 (Reuters) - Anglo-Swiss miner Xstrata said it is dropping a unit of Leighton Holdings as operator of the Collinsville coal mine in Australia, which has seen substantial losses due to soft coal prices and unfavourable currency movements.

Xstrata, which announced 600 job losses at its Australian collieries in September, said on Tuesday it plans to run the mine in-house, replacing Leighton unit Thiess by August 2013.

Separately, Thiess estimated the switch will reduce overall orders by about $650 million over four years to 2016 but will have a negligible impact on its order book in 2013.

"Despite efforts to restore the mine's profitability, a more comprehensive reorganisation is now required if it (Collinsville) is to be viable, provide employment and play a role in the community," an Xstrata spokesman said.

The Collinsville mine, yielding 3.9 million tonnes of coking and thermal coal a year, is 55 percent owned by Xstrata. Itochu Coal Resources, part of Japan's Itochu Corp, holds 35 percent and Sumitomo Corp 10 percent.

Xstrata, which is in the process of being acquired by commodities trader Glencore, blamed "substantial financial losses" at the mine on factors, "including the weak coal export market, strong Australian dollar and high costs".

"The industry as a whole continues to face some pretty significant headwinds," the spokesman said. "A lot of the conditions we're experiencing at the moment, we think may be with us for some time to come," he added.

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