CANBERRA: Chinese-controlled coal miner Yancoal Australia is cutting close to half the jobs at two of its collieries due to a downturn in global coal prices that has led to losses for the company of more than A$1 billion ($730 million).
The loss of up to 225 jobs out of a combined 518 will be spread over two of Yancoal’s seven mines, Abel and Austar, in eastern Australia.
“This has been a difficult decision for the business and while we have taken every step over the last year to try and avoid today’s announcement, unfortunately we do not have any further options available at this time,” said Chief Executive Officer Reinhold Schmidt. Yancoal is owned by Yanzhou Coal Mining, China’s fourth-largest coal company.
More than 4,000 jobs have been lost at Australian coal mines in the past two years, many in the collieries that pepper the Hunter region 150 km (90 miles) north of Sydney, where Yancoal also mines.
Prices of thermal coal used to generate electricity and metallurgical coal required in steelmaking have fallen to multi-year lows due to a global glut exacerbated by weak demand in China.
Yancoal posted net losses of $A353.5 million and A$832.1 million in 2014 and 2013 respectively. Glencore Plc, one of Australia’s biggest miners, late last year estimated up to a third of Australia’s coal sector was running at a loss. Since then coal prices have worsened.
Thermal and metallurgical coal prices remained low throughout the June quarter with continued global oversupply and restrictive import standards for specific provinces in China hurting any chance of substantial improvement, according to Yancoal.
Prices for metallurgical coal have fallen from more than $300 a tonne in 2011 to around $93. Thermal coal priced at Newcastle port, an Asian benchmark, sits at a five-year low of $60.52 a tonne, less than half its post-2008-recession peak of $136.30 in January 2011.
China’s imports of metallurgical coal declined by 25 percent in the first four months of 2015 from a year before to around 15 million tonnes, owing to weak growth in steel output and increased use of locally mined coal, according to Australia’s Department of Industry and Science.
Chinese steel mills were also reluctant to import coal in early 2015 because of the risk of prices declining rapidly during transit.
