Unprofitable coal prices have caused Bathurst Resources to announce an indefinite delay to the start of mining at its Escarpment mine, located in the Buller District, New Zealand.
With the international coal price at a nine year low of US$120, Bathurst has said that mining the Escarpment resource would be unprofitable.
Since the announcement share prices for Bathurst (ASX: BRL) have halved from 14.5 cents to 7.5 cents per share.
About 30 staff will be made redundant because of the announcement, positions from administrative and corporate support areas.
Bathurst would have recruited up to 100 staff this year for production, a situation that will not go ahead until coal prices improve.
In addition, the board of Bathurst Resources have agreed to an immediate pay reduction of up to 30 per cent, and will not go ahead with the replacement of former chairman Craig Monroe, in order to reduce the size of the board.
Former electricity industry senior executive Dave Frow had been appointed to fill the position.
Bathurst chief executive Hanish Bohannon said the company is still committed to the establishment of the Escarpment mine, but will defer ramping up production until the coal price recovers.
“For the next period, focus will be on securing the site, establishing facilities, including water management dams and stockpile areas, and mining sufficient coal to complete market qualification for coking coal supply to steel producers, principally in Japan and India,” he said.
“Sadly, this means that about 29 jobs will become redundant… But it will ensure that the company preserves cash to continue its operating and development activity.”
Buller mayor Garry Howard said that the community in the nearby town of Westport and greater Buller district would be devastated by the news.
“However we understand the position that the company has found itself in and accept that the long-term future is better served by this delay… It is a bitter pill to swallow,” he said.
“It is simply criminal to see a well-intentioned regulatory process abused and manipulated by out-of-town elements intent on frustrating legitimate and reasonable developments,” Mayor Howard said.
“What Bathurst spent on court cases could have been invested in mine infrastructure.”
Image: Forest & Bird