Gregory mine closure to hurt contractors

CONTRACTORS will be the hardest hit by this week’s mothballing of the BHP Billiton Mitsubishi Alliance Gregory open cut mine in Queensland – part of the company’s response to plunging coal prices and higher operating costs.
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The Ensham open cut in Queensland's Bowen Basin.

Lou Caruana

The 33-year-old mine is no longer profitable to the company and while it has redeployed those among its 55 employees who sought retention, there are no guarantees for its 240 contractors.

They have borne the brunt of mine closures and wind-downs in the Bowen Basin this year as companies scale back their capital outlays while maintaining their core staff.

The Japanese-controlled Ensham open cut mine put off 100 contract workers in August.

The mine, 85%-owned by Idemitsu and also has South Korea's LG as a shareholder, is one of Queensland’s biggest thermal coal mines. Its changing fortunes signal the pressure coal miners are facing to maintain margins in a climate of sinking thermal coal prices.

Rio Tinto Coal blamed low thermal coal prices for its decision to retrench employees from its Clermont open cut coal mine in Queensland less than two years after the $US1.29 billion operation was opened.

Following a review of the Norwich Park mine’s profitability, BHP Billiton announced the indefinite closure of this operation during the June 2012 quarter and is currently reviewing the viability of its other high-cost operations.

BHP said it would shelve its planned 2.5Mtpa expansion of the Peak Downs mine in Queensland but would continue with the Caval Ridge project as it sought to ramp up overall production by 50% by 2014.

“We have talked for some time about the fact that our industry is facing numerous challenges,” a BHP Billiton spokesperson told ILN.

“Against this backdrop, we are focused on reducing our operating costs and non-essential expenditures to ensure we maximise net operating cash flow by positioning our assets towards the lower end of their respective cost curves.”

“Our focus is on production at capacity, reducing costs and executing the projects currently under construction.”

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