The Queensland coal bust

Find above an interesting segment aired last night on ABC’s The Business on the sharp slowdown currently underway in the Queensland coal industry, which has experienced large job losses and significant cutbacks in mining investment following steep falls in coking coal prices.

Below is the transcript from the video. The Full HD version can be viewed here.

TICKY FULLERTON, PRESENTER: For decades mining towns in Australia have been at the mercy of the industry’s boom or bust cycle.

In Queensland the Bowen Basin is feeling the full force of a massive coal mining downturn that’s reverberating through the economy.

Projects worth billions of dollars have been cancelled as the price of coking coal tanks.

Marlina Whop reports from the North Queensland town of Mackay.

MARLINA WHOP, REPORTER: It’s a town built on sugar, the reef and for the past few decades, coal. But the mining slowdown is cutting through, slowly grinding down profit margins.

DARRYL STARK, MACKAY BUSINESS OWNER: If things don’t pick up in the near future there’s going to be a lot of good companies in Mackay that have set up for the mining industry that are going to be closing down.

MARLINA WHOP: At the height of the boom this family owned engineering business ran seven days a week. But not now.

DARRYL STARK: There was no work coming in the door so no work coming in the door that means we can’t pay our guys to do the work because there’s no work here to do. At the end of the day you’ve got to let people go.

MARLINA WHOP: Even the big players are not immune to crashing coal prices. Leading mining services company Mastermind Group, has shed 400 jobs in the past year.

TONY CARUSO, MACKAY BUSINESS OWNER: It’s all part of getting costs back to where we need to get them to be able to have a sustainable industry moving forward.

MARLINA WHOP: The big mines are scaling back, in all $50 billion worth of coal projects have now been put on hold. That equates to 7,000 job cuts in Queensland alone with many more across the country. The ventures that are going ahead will find it tough to raise investment capital.

MICHAEL ROCHE, QUEENSLAND RESOURCES COUNCIL: Well, there’s no getting around the fact that this is probably the most difficult conditions for the coal industry in at least 10 years.

MARLINA WHOP: Industry says Mackay’s experience is a national trend, not helped by the Federal Government’s carbon tax.

MICHAEL ROCHE: It’s death by 1,000 cuts really with the carbon pricing scheme. Each year it gets more severe.

MARLINA WHOP: Despite Coalition promises to scrap the tax and indications the Government will re-think its scheme, locals fear that even if coal prices start to recover Mackay will need to re-assess.

TIM MILES, MACKAY CHAMBER OF COMMERCE: The mines seem to make money like every other business so their input costs, the costs of supplying the mines is going to have to be lot less, we’re going to have to do a lot more productively.

BRETT HAMSON, MACKAY BUSINESSMAN: We’ve done everything within our power to look at our own costs and our own processes internally and how we can reduce our costs and pass that cost on to our client.

MARLINA WHOP: Three years ago Brad Hamson took a plunge by investing hundreds of thousands of dollars in state of the art welding technology for his mining services start up.

BRETT HAMSON: If we can put ourselves into a position to get through these next six months, I think we will be fairly well positioned for the next upturn.

MARLINA WHOP: Now a city once accustomed to the benefits of the mining boom will be working even harder to keep the mining dollars rolling in.

TIM MILES: The politicians of the day need to actually confront the fact that the statistical information is not really showing them or indicating to them what the underlying effects are happening in the economy.

TONY CARUSO: There’s plenty out there that have ideas and, you know, have theories on when it might turn around but, you know, our strategy is just get our business right for what’s in front of us immediately and then we’ll deal with whatever happens, you know, next.

MARLINA WHOP: Something everyone wants to know.

Leith van Onselen

Comments

  1. reusachtigeMEMBER

    Signs of over-investment everywhere. Theories on when it will turn-around? Maybe not for a generation or more! More news from the people on the ground to the powers that be that choose to ignore all this as doomsaying.

  2. tsport100MEMBER

    Turn around? Sell up and find an industry with a future!

    Chinese coal miners account for nearly half of global coal production and China is looking to restrict coal imports to prop them up!

    The party is over guys!

    • Mining BoganMEMBER

      Yep, done.

      I’m looking at throwing in the romance of FIFO for a job back home but it’s a big call to go from a senior bogan position to a Gumby bogan in a shaky spot.

      It has changed quickly for the ones who thought they got there through their own brilliance.

      • Mining BoganMEMBER

        dne, I set targets when I started and reached them a couple of years ago. I’ve just been living the pig but now it’s time to go home. Maybe.

        Riding it into the ground may give me the chance to say to all I told you this would happen….

      • Yup, anyone with half a brain knew this day would come. We didn’t know when, we still don’t know how moderate or how severe the bust will be but we all knew – or should have known – that boom and bust is the nature of mining.

        Even I have been somewhat surprised at the speed at which this seems to be turning into a jobs bloodbath, at least here in coal. I’m not sure that anybody in the industry is truly safe at present.

        How deep will it go? Who can be certain? One thing this is for certain though, is that the scale of this boom has been unprecedented – is it unreasonable to suspect that the scale of the bust may be just as unprecedented?