Peabody Energy Corp., and Glencore Xstrata, have announced plans to cut jobs at their Australian coal mines.
The announcement comes as coal prices remain low, during the biggest quarterly decline in a year.
Asian coal prices show little sign of recovery, crippled by subdued demand and increasing supply from Australia, Indonesia, and the US.
Coal prices at the Australian port of Newcastle, the Asian benchmark grade, may trade between US$ 80 and US$ 90/t for the rest of the year, according to UBS AG, while Bank of America Corp. forecasts an average US$ 86/t this year, down from an earlier estimate of US$ 92/t. Coal has dropped 7.5% to US$ 81.20/t in the second quarter, the most since the three months ended June 2012, IHS McCloskey data show.
In reaction to the difficult market conditions, coal mining companies are looking to cut costs. Glencore Xstrata will lay off around 46 employees at its Ravensworth coal mine. Glencore has cut around 700 jobs since 2012, 100 more than it said it planned to eliminate late last year. The company already halted work on its Balaclava Island export terminal in May.
Peabody Energy Corp., meanwhile, plans to cut around 450 contractor jobs, "(Contractors have) traditionally been an area of high spend for the company and as a result we will be reducing approximately 450 contractor positions at our mines over the coming weeks," Peabody president Charles Meintjes was quoted as saying by industry publication Australian Mining.
Peabody said the cuts would take place across its operations in the coal-rich eastern Australian states of Queensland and New South Wales, where it produces both coking and thermal coal.
However, Peabody CEO, Gregory Boyce, painted an optimistic picture for the future of coal globally. Boyce said he expected coal demand to grow by around 1.4 billion t over the next five years, driven by the needs of China and India. Despite the currently difficult market conditions, Boyce said the resource’s market outlook was “bright.”
Edited from various sources by Samuel Dodson.
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