The pressure of the high Australian dollar combined with lower coal prices is becoming too much for some operations to carry.
Today it’s the Isaac Plains coal mine near Moranbah in Queensland, a joint operation run by Vale and Sumitomo, which will be shut.
Sumitomo confirmed the Bowen Basin operation, which produces both thermal and coking coal and employs almost 300 workers, will be put on care and maintenance early next year.
“In response to the recent downturn of the international coal market, Sumitomo Corporation has announced its decision to place the Isaac Plains coal mine in care and maintenance, with plans to cease operations by end of January 2015,” the company said.
The announcement came as the company revealed a 30 billion yen writedown on its Australian coal assets to the Tokyo Stock Exchange on Monday.
Sumitomo bought its 50 per cent stake in the operation from Aquila Resources for $430 million in 2012.
Commenting on the mothballing, Vale said, “the operation is not economically feasible under current market conditions.”
Vale said the decision was made as it honed its focus on capital discipline.
Earlier this month BHP revealed 700 jobs will be cut from its Queensland BMA coal operations as it struggled to deal with the current economic environment. More on that here.
But today BHP CEO Andrew Mackenzie said despite all the job losses the coal sector is getting its “mojo” back, The Australian reported.
Despite the falling coking coal price which has been teetering just over the $US111 per tonne mark since March, well below its $US300 a tonne highs in 2011, Mackenzie said it’s not all bad news and some competitiveness is being restored to the sector – especially with the Aussie dollar’s recent drop below 90 cents.
BHP will officially open its $4.2 billion Caval Ridge coking coal mine, which is also jointly owned with Mitsubishi, in Moranbah next month.