By James Regan
SYDNEY, April 11 The world's biggest miner BHP
Billiton BLT.L> said on Wednesday it will cease
production at a loss-making coal mine in northeast Australia,
citing low output, high costs and soft coal prices.
"Norwich Park mine has been losing money for several
months," BHP said, adding that it would try to redeploy as many
as possible of the mine's some 1,400 workers.
The move comes a year after massive flooding devastated coal
mining in the Bowen Basin of Queensland state, followed by
crippling rolling industrial action.
Norwich Park, yielding metallurgical coal used in
steelmaking, is one of the smallest of six mines in Queensland
operated under a 50-50 partnership between BHP and Japanese
trading house Mitsubishi Corp.
In the six months to Dec. 31 a total of 734,000 tonnes of
coal was mined from Norwich Park, BHP data shows. Newer figures
on the mine are due to be released with BHP's quarterly
production report on April 18.
In total, mines operated under the partnership have an
output capacity of more than 58 million tonnes a year,
representing about a fifth of annual global trade in
The Norwich Park mine was first worked in 1979 and is
regarded as comparatively costly to operate, given the geology
of the lode.
Industrial action at the mine contributed to lower
production, as did heavy flooding across Queensland's coal pits
in 2011, according to BHP.
"As a result, we have had to take urgent steps to both stop
the losses and find the best way to secure the operation's
long-term future," BHP said.
Efforts would be made to "maximise redeployment
opportunities" for workers at the mine to the nearby Saraji
mine, it said.
"This is a kick in the guts for our workers," said Stephen
Smyth, president of the Construction, Forestry, Mining and
Energy Union (CFMEU), adding that the union had no prior
indication from the owners that operations would cease.
Union leaders were due to meet with management of the mine
on Thursday to discuss the redeployment of workers, Smyth said.
Unions led by the CFMEU have been staging rolling work
stoppages across the six mines since June 2011.
The Norwich Park mine employs 490 workers directly and 900
as outside contractors, according to a BHP spokeswoman.
BHP-Mitsubishi mines including Norwich were earmarked by
unions last week for a two-day work stoppage starting on April
12 over stalled negotiations on a new work contract.
Smyth said those actions would still take place.
BHP earlier this month declared force majeure on deliveries
from the predominantly metallurgical coal mines in the Bowen
Basin, citing long-running labour stoppages compounded by heavy
rains that have impeded production runs.
Force majeure is a legal clause relieving companies of
immediate supply obligations due to circumstances beyond their
UBS has estimated that the strikes and heavy rains have
resulted in lost production of 2 to 3 million tonnes across the
six mines this year.
Prices of metallurgical coal have weakened in recent months
but are still more than twice as high as estimated production
costs at the mines of around $80 per tonne, according to
The decision to cease production came after a seven-week
review that failed to identify any immediate remedies to turn
the mine around, according to the company.
"Until we find viable solutions for the future of the mine,
we will not restart operations," BHP said.