Coking coal mines will see global shutdowns

Coking coal mines will be closed or suspended at a steady
rate until a reduced supply drives a price recovery, Anglo American CEO Mark
Cutifani has said.

He stated that the mines,
globally, will most likely shut at a rate of about one every two to three weeks
until a lack of supply affects the price, he
told the AFR.

Anglo American itself announced
it was placing its Peace River Coal
operations in Canada into
care and maintenance for the very same reason, earlier this month.

Seamus French, Anglo American
Coal’s CEO, at the time said: “Significant reductions in operating costs and
reduced mining activity have failed to offset the impact of a weakening
metallurgical coal price. As a result, we have been forced to take further
action in response to the weak market conditions, so that we can preserve the
long-term future of the operations.”

Cutifani stated that other
operators are likely to carry out similar operations globally.

“I suspect others will have to
do fairly similar moves to keep themselves whole,” he said.

The
same logic was behind Bathurst Resources’ decision earlier this year to halt
the opening of its coal mine in New Zealand.

It announced an indefinite delay to the start of mining at its Escarpment mine.

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 at the time.

Closer to home Wollongong Coal announced the shutdown of its Wongawilli mine on back of falling coal prices, amongst other workplace issues.

Cutifani went on to say that
if the spot price does not stay above US$150 per tonne “you’ve got stress right
across the industry”.

Currently the price is
sitting at around the US$120 per tonne mark.

In the mean time around 30
million tonnes of supply will need to be removed from the market “to have any
sort of meaning,” he told the Australian Financial Review.

“I think everybody is doing it tough in met coal, even the
markets and our customers are saying there needs to be a higher met coal price,
but people keep throwing volume into the market.

“So, at the end of the day,
production that is not making money starts to be turned off, prices will remain
tight.”

In Australia Anglo American’s metallurgical coal mines are
Capcoal, Dawson, Foxleigh, and Moranbah North.

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