Glencore Xstrata accepts coal price cuts

Glencore Xstrata has accepted a 14.7 per cent cut to the price of Hunter Valley coal, putting more pressure on production costs.

The Newcastle Herald reported that the deal struck with Japanese power station operator Tohoku Electric Power Company has set a reference price for the Japanese financial year of $US81.80.

Last year’s reference price was $US95, and recently similar quality coal has been selling for $US75 in one-off sales.

As job cuts in the Hunter coal industry have numbered around 1500 in the past two years, the price cut may result in more job losses.

Despite the fall in price, coal exports at Newcastle continue to rise, with the annualised export rate running at 156 million tonnes for the first three months of 2014, up six million on the same period last year.

Japan’s share in Newcastle coal exports is now at 40 per cent, down from 60 per cent a few years ago, and China accounts for 25 per cent.

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