No deal for BMA’s Gregory Crinum coal complex

BHP Billiton has called off the sale of its Gregory Crinum coal complex after it couldn’t secure a buyer for the closed mine.

The miner closed the open cut Gregory operation late last year, stating it was no longer profitable, however work continued at the underground Crinum mine.

BHP Billiton-Mitsubishi Alliance's (BMA) asset president Stephen Dumble said at the time production costs for the Gregory open cut operation exceeded revenue from its sales and "therefore the only option available to the company was to cease production".

In February BMA announced it was looking to sell off the central Queensland site, an option it has today flagged is not in shareholders’ best interests, deciding rather to retain the asset.

"This decision is a result of a strategic review of the mine, including investigation of potential divestment," BHP said in a statement.

"The review concluded that shareholder value is maximised by retaining the [closed] asset within the BMA portfolio.

"Recent operational improvements at the Crinum underground mine support the company's decision to continue to operate the site."

Managing thinner margins off the back of rising operational and labour costs and dropping commodity prices is becoming increasingly difficult for Australian coal miners.

Australia’s once buoyant coal sector is struggling to fend off attacks from all sides.

In 2009 Australia was 2nd only to South Africa in having the lowest seaborne unit coal cost at $43 a tonne, South Africa sat at $39 a tonne.

Jump forward three years to 2012 and Australia slips to 10th place, creeping in just ahead of Canada with a seaborne tonne of $77, and South Africa still miles ahead at $59 a tonne.

In the last 15 months the Australian Coal Association estimates 9000 jobs have been wiped off the face of the Queensland and NSW coal sectors, with miners struggling to deal with the market shift, forcing mass lay-offs and in some case site closures.

Since that figure was released, more coal jobs have disappeared, in the last month Peabody Energy sacked 400 workers and 450 contractors in two fell swoops; GlencoreXstrata added to the damage, axing  46 workers at its Ravensworth mine in the Hunter Valley and in the same week Downer announced it was slashing 185 jobs from BMA’s Goonyella Riverside coal mine in Moranbah.

Anglo American boss Mark Cutifani recently said given Australia’s history, know-how, and close links to Asia, Australia should be miles ahead of its competitors.

But once high cost countries like Canada and the USA have managed to apply technologies and improve productivity and are eating away at Australia’s market share.

And it doesn’t end there, the low cost profiles of South Africa and Indonesia means they’re doing the same.

The shift of world economic power to Asia should also be playing in Australia’s favour.

But Cutifani warned “we have more than wasted a commodities boom”.

So as miners announce austerity measures, job cuts, and plans to improve the allusive productivity figures, has the sector missed the ship?

Cutifani said the Australian coal industry is at a tipping point for future growth.

“It will only survive and grow and continue to take its position on the global stage if governments demonstrate that they want the sector to invest and they want the county to grow,” he said.

Australian Mining reported BMA closed its Norwich Park coal mine in March last year and also announced plans to shelve Red Hill Mine near Moranbah as well as Saraji East mine plans, near Dysart.

But since the announcement the Red Hill mining project has been revived, and could generate 3500 jobs.

In June Australian Mining reported the State Government said BHP Billiton Mitsubishi Alliance wished to modify its mining lease application over the Red Hill tenement for an extension of three longwall panels at the Broadmeadow underground mine.

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