Coal mining cuts ‘drive home reality’, QRC says

The dual announcement of Xstrata's job cuts and BHP Billiton's closure of the Gregory mine has "sent a clear message to the government", the Queensland Resources Council says.

Yesterday, within the space of two hours Xstrata announced that it was cutting around 600 jobs from its coal operations in Australia, while BHP stated that it was ceasing production of open cut operations at the Gregory Crinum coal mine in Queensland.

The Queensland Resources Council (QRC) stated that these moves by two of Australia's largest miners "sent a clear message to governments that the industry is not a bottomless pit for revenue".

The QRC's chief, Michael Roche, went on to say that with Queensland state budget "strongly tipped to impose higher coal royalties and with the federal government reportedly looking at a suite of tax hikes hitting the resources sector, it appears as though the message is struggling to get through.

"Queensland’s biggest export industry is in the grip of a perfect storm caused by plummeting prices and rising costs that can only cost more jobs, premature mine closures and the cancellation of some proposed projects," he said.

Roche went on to add that yesterday saw  falls of another seven percent-plus in premium coking coal prices, to a level more than 50 percent below those of September 2011".

In September the price stood at $128 per tonne.

Since January the coal price has steadily dropped from the year's high of $119 per tonne to $87 per tonne in July, but has seen a slight recovery up to $89 per tonne in August.

Roche added that a lack of support for the industry at the top levels of government has only weakened an under pressure industry.

"Another local government authority has jacked up general rates for minerals and energy sector operations by 50 percent," he stated.

"Eventually, I hope governments will realise that the rubber band wrapped around their wads of coal cash can’t be stretched forever.

"Queensland is already one of the world’s highest taxing jurisdictions for coal miners, and as the QRC has been telling governments consistently, the best way to boost their revenues from the mining and resources sector is to implement measures that remove impediments to boosting production."

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