At a time when the coal market is in freefall, global giants Glencore and Peabody Energy have joined forces to combine adjacent operations in NSW’s Hunter Valley.
The companies have formed a 50:50 joint venture to develop an open cut thermal coal project between their existing United and Wambo mines in the Hunter Valley.
The mine will operate from mid-2017, subject to government approval.
Glencore stressed that it will not increase output from the region as production from other mines will be declining by then.
The project would realise major synergies between the two neighbouring mines, Glencore said on Tuesday.
Glencore’s share of production will be up to three million tonnes of coal a year while Peabody said it expects its share to be also about three million tonnes.
The coal industry has been hit by major job losses in the past three years, with thermal prices dropping by 25 per cent in 2014 and most Australian coal miners barely breaking even.
Glencore recently announced it would suspend Australian operations over Christmas, forcing 8,000 workers to take three weeks leave, in an effort to cut supply and force up the coal price.
Local Construction Forestry, Mining and Energy Union president Peter Jordan welcomed the announcement of the combined operations.
“It will contribute towards job security and inject badly needed income into the regional community as well,” he said in a Glencore statement.