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Coal has had a tumultuous 12 months but will 2015 be any better? Coal prices declined steadily in the first months of 2014 in response to a combination of in-creased supply and lower import demand from China.
Australian benchmark contract prices for high-quality metallurgical coal settled at $US120 in the September quarter, a price that left many coal operations unprofitable.
Thermal coal fared even worse, with Newcastle free on board spot prices averaging US$73 a tonne in the first eight months of 2014, down 16 per cent year on year. The price glut mean something had to give, and 2014 was the year the coal industry decided to restructure its workforce leading to massive job cuts.
Australian Mining estimates that more than 2500 jobs in the coal sector were cut as mining companies either downsized their operations or shut them down completely.
The Integra coal complex in the Hunter Valley was an early victim of coal’s fall from grace, as Vale announced in May that it would close the operation, taking 500 with it.
Isaac Plains in Central Queens-land also went into care and maintenance, with 300 jobs cut.
And in news that came as a shock to many, Glencore decided to close its coal operations for three weeks over Christmas.
The company said the move was a “considered management decision given the current over-supply situation”.
Glencore said this will reduce the need to push incremental sales in the weak commodity price environment.
And herein lies the problem with the coal price and its chance of recovering much-needed ground in 2015.
The Bureau of Resources and Energy Economics (BREE) said Australia exported 181 million tonnes in 2013-14 of metallurgical coal in 2013-14, with this expected to increase to 185 million tonnes in 2014-15.
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