* Glencore cuts 3 mln T coal output at Newlands, Oaky Creek
* Job cuts will shrink labour force at the mines 25 pct
* Output, labour cuts follow 40 pct decline in coal prices
PERTH, June 27 (Reuters) - Glencore Xstrata said on Thursday it has cut back coal production and laid off 450 workers at two of its Australian coal mines due to falling coal prices, higher costs and the strength of the Australian dollar.
The latest cuts will shave off about 3 million tonnes of coal production at Glencore's Newlands and Oaky Creek mines, according to a source familiar with the matter.
"Against a backdrop of lower coal prices, high input costs and the strong Australian dollar, the decision to cut production at the mining operations has been taken to maintain viability in a challenging market," Glencore Xstrata said in a statement on Thursday.
The cuts are just the latest in a string of announcements of layoffs, mine closures and cost-cutting among Australian miners, as they try to keep operations profitable as resource prices fall, largely due to slower-than-expected growth from China.
Prices for thermal coal, used for power generation, have fallen nearly 40 percent in the last two years from a record $130 per tonne to around $80 per tonne; prices for coking coal, used for steelmaking, have dropped about 40 percent in the last year to around $130 per tonne.
The drop in prices has spurred Australian miners to cut an estimated 9.4 million tonnes of thermal and coking coal output through mine closures, but another 66.3 million tonnes of production is coming online through the end of 2013, still leaving the market heavily over supplied, according to UBS.
Earlier this week, Glencore said it had laid off 46 workers at its Ravensworth coal mine, while Peabody announced it had cut 450 jobs across its mines in Australia's New South Wales and Queensland states.
Glencore's Oaky Creek, which produces coking coal, will see around a 2 million tonne cut in production. Newlands, which produces both thermal and coking coal, will cut production by about 1 million tonnes.
The mines have a capacity of around 8 million tonnes a year each. The latest job cuts will shrink the workforces at the two mines by around 25 percent.
Australia's Bureau of Resources and Energy Economics (BREE) forecast that Australia will see around a 5 percent increase in both thermal and coking coal despite softening demand and the global oversupply of coal.