Queensland mines have cut more than 400 jobs in less than 48 hours but the worst is yet to come, industry analysts have said.
Xstrata Coal was forced to retrench 190 contractors and 40 full time staff from its Oaky no1 coking underground coal mine due to a reduced demand for steel.
Acerlor Mittal, the world’s biggest steel maker, has cut output by as much as 35%. Adding to the woes, China’s industrial output in November grew at the slowest pace in nearly seven years, and fell for the fifth month in a row.
Xstrata Coal’s communication manager James Rickards said the company’s coking coal mines were suffering under the reduced demand.
“We are in a challenging sales market for coking coal but we have to remember that there is still a big market for thermal coal, with prices well above what they were one to two years ago,” Rickards told MINING DAILY.
Although Xstrata has no plans to make further staff cuts in the coming weeks, the company does support two other coking coal mines which are at risk of suffering as well.
“We have two other coking coal mines including Ravensworth in NSW. At this stage we have no plans to make any further changes to our business. The problem with Oaky was that it was exposed. It had very large stockpiles that had no where to go thanks to a poor market.”
However, Xstrata is not the only coking coal company suffering at the hands of reduced demand.
Oz Minerals was forced to cut 135 of its contract staff, a 12% reduction in Century’s workforce.
Similarly, Macarthur Coal cut 180 jobs early this week.
The company fell 22% after saying profit may be between $75 million and $125 million in the six months ending December 31, 53% lower than the previous forecast a month earlier.
Mining giant BHP Billiton is also facing increased pressure to announce big production cuts. BHP, which accounts for 25% of the global seaborne trade in coking coal, is currently hanging tough, refusing to provide a daily commentary on its coking coal production plans.
However, it is not just the coking coal mines that are being affected by the latest downturn in demand.
Universities are also feeling the pinch as high school students look towards a career in mining with less favour.
According to the University of Queensland’s senior lecturer and program leader for mining engineering Dr Mehmet Kizil, although mining job cuts have been highly publicised, the industry is still in the middle of a skills shortage.
“Regardless of whether or not the industry is currently reeling from a boom or bust, there will always be a shortage of skilled workers. We can see right now, the companies are cancelling their future projects and cutting their contractors not their skilled employees,” Mehmet told MINING DAILY.
“The university’s engineering faculty runs in the opposite direction to a boom. When the industry is booming we do not have the right number of students graduating.
“However, as more people hear about the boom and the generous wages that the mining industry can offer, universities tend to get more applicants. But, as it takes four years to get engineering degree, by the time the students have graduated the boom has swung.”
“That said, in the 12 years I have never seen graduates struggle for employment. They are always in demand and we have been in a skilled labour drought for some time.”