Glencore will close the Tahmoor coal mine in 2019, as weak coal prices continue to hammer the industry.
It began consultation with Tahmoor’s workforce yesterday, and plans to shut the mine in early 2019.
The move will affect around 350 workers, with staff at the site gradually reduced as Tahmoor winds down.
The largest workforce reduction will occur mid-next year, when around 200 workers will be let go, with the workforce to be progressively reduced until the last longwall is mined, after which Glencore will keep a small team on site to meet its environmental rehabilitation liabilities.
Speaking to a source close to the matter, they told Australian Mining the closure has been announced now to give more time for consultation.
“We appreciate this will be a difficult time for our employees and we will be putting support services in place to assist them, including investigation of opportunities for redeployment at other Glencore coal operations,” it said.
Glencore reportedly investigated a number of options to keep the operation running, such as the Tahmoor South and Tahmoor North projects, but stated current market conditions do not support the future of these initiatives.
“The decision has been made as a result of continued low prices in global coal markets, which has meant the economic return from reserves still available at Tahmoor are not sufficient to warrant the investment required to mine them,” Glencore said in an official statement.
It comes just a month after the miner announced the closure of its Newlands North coal mine and its West Wallsend mine, which had both come to the end of their operational lives.
It is understood Glencore is unlikely to revisit the mine’s reopening in the future due to forecast weak coking coal prices and associated costs.
“It would be difficult to reopen the mine,” a source close to the matter told Australian Mining.
“The price would have to be significantly higher to consider reopening the mine, so it’s unlikely Glencore will,” he said, adding that the care and maintenance costs outweigh likely revenue.
“If the mine were on care and maintenance, compared to shutdown, it would incur ongoing costs, most likely of around $10 million per year, whereas with shutdown there is a one-off cost.”
Greenpeace welcomed the closure, calling it a ‘reality check’ for the Australian Government over its support of the industry.
“Tahmoor’s closure is one of the strongest market signals yet that coal is on the way out, and it’s been sent by Glencore itself, the world’s largest coal exporting company,” Nikola Casule, Greenpeace’s climate campaigner, said.
“That Glencore is closing this mine – rather its favoured practice of cutting staff and production – shows how little appetite there is to buy into the coal industry, let alone expand it.”