WILL coal prices recover?
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That is the question everyone involved in the industry would love to know.
Because unless they do, or coal producers can drastically cut their production costs, the sector is facing a difficult future.
At the height of the boom in 2011, thermal coal was selling for $US130/tonne; now prices are languishing around $US61/tonne.
Last week there was a deluge of media reports concerning the industry following announcements from Glencore, the country’s biggest coal producer, saying they are cutting coal production by 20 per cent in 2015.
It was also revealed the company was looking to cut up to 120 full-time positions across its NSW coal division. Rosters at some operations may be cut from seven to five days and plant will be ‘parked-up’ mining parlance for leaving coal in the ground.
At the same time, Rio Tinto said they have restructured their energy division with job losses expected to follow in NSW and Queensland.
Add to this a statement from Vale, the company that shut its local Integra mines in Singleton last year, advising it had slashed the book value of its Australian coal assets by 71 per cent during 2014.
There is no doubting it is a difficult time for the industry with rumours and speculation the one constant as the big miners try to find a way to remain profitable.
One proposition gaining some traction, especially as rail haulage “take-or-pay” contracts come to an end meaning the miners no longer have to pay for unused haulage space on the rail, is the option to leave coal in the ground until prices lift.
That would mean a slowing in mine expansions and the opening of new mines.
This would be welcome news to those opposed to the industry with a leaked report from the Office of Environment and Heritage (OEH) published in the Sydney Morning Herald (Saturday, February 28) stating “large swaths of the Upper Hunter are likely to be cleared to make way for as many as 16 new or expanded open-cut coal mines”.
The paper reported OEH has been working with mining giants, including BHP, Glencore and Rio Tinto, to assess new coal projects that could cover as much as 45,000 hectares, or about 18 times the size of the City of Sydney.
Each miner paid $93,000 to help cover the costs of the assessment, the OEH said.
According to a separate leaked timeline prepared last July and obtained by Fairfax Media, the Baird government had planned to have “final sign-off” of the studies before next month’s NSW elections but “unforeseen delays” had occurred.
In the biodiversity study, seven species including the regent honeyeater, diamond firetail and brush-tailed phascogale, face being wiped out in the region.
Endangered communities at risk include the Hunter Valley Weeping Myall Woodland and the Warkworth Sands Woodland.
Commenting on the article, NSW Minerals Council CEO Stephen said it was “impossible to comment” on the specifics of the reports because the working documents had not been provided to industry.
“The purpose of identifying species at risk of extinction is to ensure that additional measures are put in place to protect them,” Mr Galilee said.
Lock the Gate Alliance NSW coordinator Georgina Woods said: “We’ve suspected for some time that an agreement was being stitched-up behind closed doors with the coal industry to sign-off on extensive clearing of remnant woodland in the Hunter Valley to accommodate vast new areas of mining.
“There needs to be full public release of all information immediately and assurances that this is not a done deal.
“Public faith in the government when it comes to basic limits on coal mining is at rock bottom.
THE union has suggested Glencore look at initiating more shutdowns during the year to meet their new production levels rather than cut full-time positions.
Construction Forestry Mining and Energy Union (CFMEU), northern district president, Peter Jordan said the union had held discussions on various Glencore mine sites last week and was told the job losses would not affect permanent employees.
“But our opinion and suggestion to the company is if the Christmas shut down worked so well, why not look at a two-week Easter shutdown and no work on the 12 annual public holidays?“ he said.
“Another option in say the Christmas school holidays is not have a complete shutdown but allow those workers who want extra time off to take leave and therefore reduce production that way.”