Australian coal industry takes another step closer to the abyss – by Peter Ker (Sydney Morning Herald – February 27, 2015)

http://www.smh.com.au/

The downturn in the Australian coal industry has deepened, with three major mining companies warning on Friday that more jobs will be cut, mines will close and assets will be written down to a shadow of their former value.

Rio Tinto, Glencore and Brazilian miner Vale have all reiterated their pessimistic view of the coal sector’s future, revealing major changes to their local operations.

Glencore has made the most aggressive move, announcing that it will cut its Australian coal output by 15 million tonnes in 2015, or more than 20 per cent when compared to 2014 volumes.

In a move that is likely to put more than 100 jobs on the line, Glencore said the cuts would “more closely align” its coal output with customer demand, and some expansion projects would be slowed. “We will defer some projects and ensure that inventory management and blending are optimised,” the miner said in a statement.

The move comes less than a year after Glencore tried to merge its Australian coal division with Rio Tinto’s, underlining the predicament the Australian coal sector finds its self in.

The production cuts could cast doubt on the prospect of expansions at the company’s Rollaston and Mt Owen coal mines. In January a Glencore subsidiary in South Africa said it would reduce coal output by 5 million tonnes this year as a result of the market downturn.

Glencore’s move came as Rio Tinto announced a break-up of its energy division, which has been run out of Brisbane and dominated by the Australian coal and uranium assets.

Rio did not quantify the number of jobs that would be lost, but chief executive Sam Walsh said the change was part of efforts to “reduce costs, simplify and strengthen our company”.

Energy boss Harry Kenyon Slaney will leave Rio after almost 25 years as part of the cuts.

For the rest of this article, click here: http://www.smh.com.au/business/mining-and-resources/australian-coal-industry-takes-another-step-closer-to-the-abyss-20150227-13qibm.html

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