This afternoon coal major Xstrata announced a bunch of job cuts in the face of ongoing falling prices but more interesting was the following part of the release:
Although we are not breaking down the reductions by individual site, the restructure is focused on scaling back high cost production at some of our mines. We do not expect a material impact on Australian production volumes. We are also reducing some roles at our corporate headquarters in Sydney and consolidating our office-based operations in Queensland.
Our approved growth projects, such as Ravensworth North, Ulan West and our expansion at Rolleston, are proceeding as planned, and remain on budget and on schedule. Feasibility studies into our Wandoan Project continue, to enable an investment decision once relevant approvals have been completed and market conditions permit.
Wandoan is a $6 billion thermal coal project. It sounds to me that it is on the shelf unless thermal coal prices rise. Moreover, they’d have to rise in a manner that was persuasively long term.
And as Xstrata beats about the bush, BHP has cut the chase. From the AFR:
The BHP Billiton Mitsubishi Alliance said it would close its Gregory coking coal mine in Queensland on October 10, as it struggles with falling prices, high costs and the strong Australian dollar.
The move comes after it already closed its Norwich Park for mine for similar reasons in May. Both had been subject to industrial action which has now been resolved.
The Gregory open-cut mine, which is part of the Gregory-Crinum complex including an underground mine, produced 2.8 million tonnes of coal last year, including the half share owned by BHP’s partner, Mitsubishi. The prior year, it had produced 5.4 million tonnes of coal.