BHP bleats as coking coal plunges

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Coking coal has sunk to a spectacular new low of $105:

coking

That has BHP up in arms. From the AFR:

Speaking in Brisbane on Wednesday, Mr Dalla Valle said a global company like BHP was well-placed to see the differences in cost across different nations.

He said truck drivers at the Queensland coking coal mines were “1.5 times” more expensive thant ruck drivers on BHP’s mines in New Mexico, USA.

“This highlights the productivity and cost challenge we have in Australia,” he said.

“The world sets our prices, Australia sets our costs.”

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More misleading “he said, she said” journalism. Although I agree we have a wages issue in some areas of the resources space, just because BHP says so doesn’t make it fact. How about some context? For instance:

  • are the mines more remote here and likely to attract higher wages?
  • is the coal easier and cheaper to extract here, less overburden etc?
  • is the cost of getting the coal to market cheaper here?
  • is the coal of the same quality and end-point price?
  • what about the maniacal demand over-projections and over-investment of management that stirred wages?

I could go on but you get the point, quoting a simplistic wage comparison is propaganda. Most Australian production is far cheaper than North America:

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met

We’re biting deep into that cost curve now!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.