North Goonyella coal mine cuts production and jobs

Peabody Energy is cutting production and jobs at its North Goonyella coal mine in Queensland.

The mine, located 30km north of Moranbah, will reduce metallurgical coal production by 1.5 million tonnes per year.

Over the next month the mine will transition to one production shift per day, with associated employee and contract reductions of 35- 40 per cent – this means around 200 jobs will be lost.

Peabody said the change to production is designed to lower costs, improve cash flows and increase productivity.

The company expects production at the mine to decline to approximately 2.3 million tonnes this year from originally projected 2015 production levels of 3 million tonnes.

The move comes as coal prices reach lows not seen for 10 years.

The price of metallurgical coal has fallen 23 per cent this year to $86 a tonne.

The slump is due to weakening demand out of China as the country’s economy transitions from its heavy industrial phase into a more services focused era.

“Driving much of this slowdown (in coal) is China’s transition,” said Citigroup analyst Ivan Szpakowski.

“It is a transition we think there is no going back from.”

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