Mining equipment company shuts down as coal sector keeps trimming

A NSW mining and earth moving equipment company has gone into receivership as Australia’s volatile coal sector continues to put the squeeze on the service industry.

Bowditch & Partners Earthmoving had operated in the NSW Hunter Valley for over 20 years but say the recent move by miners to reassess their expenditure and put major projects on the backburner had hit the service company hard.

Morgan Kelly of accounting firm Ferrier Hodgson has been appointed as a receiver to the company. In a statement, he said the company had collapsed as a result of cyclical movements in the coal industry, but expected investors to be interested in purchasing the business, designbuildsource reported.

“Events such as this receivership are a natural part of the cycle. We anticipate there will be a demand for these assets and the business,” he said.

UBS analyst Tom Price said producers were conservative in their outlook for commodity prices. He expects coal prices to drop over the next five years due partly to increased supply and said if miners could not trim costs, there was ''a risk they'll have to close some assets down''.

There has been a flurry of cost cutting measures from major players in the coal sector in recent months, with many blaming the high Australian dollar and elevated production costs for the cuts.

Rio Tinto and Xstrata have confirmed plans to slash around 100 jobs each as they try to stem losses from struggling coal mines in NSW and QLD.

Rio will cut jobs from mines in central Queensland and the NSW Hunter Valley.

The Construction, Forestry, Mining and Energy Union said the cuts would come on top of a further 100 fixed-contract positions Rio said it would cut from the Clermont coal mine this month.

Meanwhile Xstrata announced plans to axe around 100 jobs with the closure of its Brisbane office.

Chinese-owned coal miner Yancoal has also announced plans to pursue “aggressive” cost reductions across its Australian sites in 2013.

“More cost reductions are planned for 2013 with another 11 per cent expected, taking the total cost cuts from first half 2012 to about 15 per cent for the company,” it said.

“Coal sales prices for all types declined during the first half and appeared to have reached the low point of the cycle during the second half.”

While Whitehaven Coal is laying off 40 employees from its Rocglen and Tarrawonga mines in North-west NSW.

Glencore chief Ivan Glasenberg has criticised mining CEOS for saturating the industry with new mines, leading to a surplus in metals and shrinking profits.

Glasenberg argues that stalling the development of new mines will help prolong higher commodity prices.

Image: bowdtichearthmoving.com

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