UPDATE 1-Glencore suspends Australia coal mine as market worsens

Wed Mar 26, 2014 11:23pm EDT

Related Topics

* Glencore suspends operations at Ravensworth coal mine

* Mine to be put on care and maintenance in September

* Blames low coal prices, high costs and strong Australian dollar (Adds details)

SYDNEY, March 27 (Reuters) - Glencore Xstrata will suspend operations at its Ravensworth underground coal mine in Australia following a plunge in coal prices due to a supply glut.

The move underscores the plight of coal miners operating in Australia, including AngloAmerican, BHP Billiton and Rio Tinto , which have closed mines and cut staff in recent months to combat worsening conditions.

A Glencore spokesman said it was no longer financially viable to operate the Ravensworth mine owing to a combination of lower prices, high production costs, a strong Australian dollar and geological constraints in future mining areas.

The mine produced 2.1 million tonnes of semi-soft coking coal in 2013 and will be placed on care and maintenance once work on a longwall section is completed in September, according to the spokesman.

The price of coking coal used in steelmaking has tumbled by some $200 per tonne from its 2012 high above $300.

Analysts blame the decline on a supply glut amid slowing growth in demand from Asian steel markets for imported coal.

Recent metallurgical coal price settlements by major coal miners showed a fall in the price of all metallurgical coal types for the first quarter of 2014. The semi-soft coking coal benchmark price was settled at $103.50 per tonne, down $2 from the fourth quarter of 2013.

The Ravensworth mine in the Hunter Valley coal belt of New South Wales state employs 130 full-time employees, according to Glencore.

Redeployment options across the company's other mining operations are being investigated, it said.

Over the past 18 months, 1,500 jobs have been lost in mining in the Hunter Valley as market conditions worsen, according to Stephen Galilee, chief executive of the New South Wales Minerals Council.

The Ravensworth underground mine operates as a joint venture between Resource Pacific Pty Ltd, a company owned by Glencore and Marubeni, and South Korean steelmaker Posco.

As majority shareholder of Resource Pacific, Glencore oversees the management of the mine.

Most recently, BHP and coal mining partner Mitsubishi 230 jobs would go at the Saraji coking coal mine in Queensland state to enable it to remaain viable. (Reporting by James Regan; Editing by Richard Pullin)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.