The world's biggest exporter of coking coal will shut down a key mining project in New South Wales on the grounds of bloated costs and want of profitability.
The Anglo-Swiss commodities giant announced that it will close the Ravensworth underground coal mine in the Hunter Valley by this September on the grounds of want of profitability.
In an official statement Glencore Xstrata imputed the suspension of operations at the mine to burgeoning costs, ailing prices for coal,the high Australian dollar, as well as geological factors impeding mining operations.
Thermal coal prices fell to the USD$74 per ton threshold earlier this month – the level at which marginal coal producers must either suspend operations or raise output in order to reduce unit costs, as a result of locked-in take-or-pay contracts of infrastructure services.
In 2013 the Ravensworth underground mine produced 2.1 million metric tons of semisoft coking coal, which is primarily used in the manufacture of steel.
News of the closure follows the retrenchment of 35 workers at Ravensworth in October. Around 130 staff will be affected by the closure of the mine, although only 17 will be made redundant, as Glencore Xstrata will seek to re-allocate the remaining workers to other resource projects in Australia.
Several other key coal operations in Australia have been suspended by global mining giants over the past several years, including BHP Billiton’s Norwich Park and Gregory coking coal mines in Queensland, and Rio Tinto’s Blair Athol mine, which was shut in 2012.
Glencore Xstrata has already reduced its Australian workforce by over 10 per cent during the past year and a half as part of efforts to reduce costs, shore up efficiency and increase the company’s profits.
The Anglo-Swiss commodities giant, which is the world’s biggest exporter of thermal coal, recently posted a massive USD7.4 billion loss in 2013 as a result of write-downs on the good-will generated by the merger between its constituent firms.
The huge loss served to obscure a fairly robust performance by Glencore Xstrata during the first year following the merger, with revenues rising by 9 per cent in 2013 to hit USD$233 billion.