More coal mine closures ahead: Glencore

GLENCORE believes more metallurgical coal mines closures are likely while it foresees an India-driven recovery in thermal coal demand for the years ahead.
More coal mine closures ahead: Glencore More coal mine closures ahead: Glencore More coal mine closures ahead: Glencore More coal mine closures ahead: Glencore More coal mine closures ahead: Glencore

Image courtesy of Glencore.

Blair Price

Queensland’s coal scene is continuing to shed more jobs as spot hard coking coal prices hit a new 2014 low of around $US110 a tonne in recent weeks.

This week has started with the news that the Isaac Plains thermal and metallurgical coal mine in Central Queensland will close by the end of January, costing 300 jobs.

Last week there was uncertainty after BHP Billiton Mitsubishi Alliance announced plans to axe 700 jobs in the state – with the met coal miner yet to reveal when these cuts will be fully implemented.

Both of these events followed Anglo American CEO Mark Cutifani’s seemingly prescient call that one met coal mine will be mothballed every two or three weeks – made a fortnight ago and based on the assumption that met coal prices remain depressed.

Glencore head of coal marketing Tor Peterson has also joined this chorus line, with Goldman Sachs saying more Australian mine closures were needed back in July.

“Current metallurgical coal margins are expected to lead to further mine closures,” Peterson said in a Glencore presentation to analysts on Friday.

Yet his views on long struggling thermal coal, which Glencore is the leading exporter of, were markedly different.

While China’s recent air pollution fighting move to restrict high sulphur and ash-content thermal coal imports to its more populated regions has led to estimates that 30-39 million tonnes of Australian exports will be impacted, Glencore is expecting more pain for the domestic industry.

“Over 2 billion tonnes of Chinese domestic coal production capacity does not meet the quality criteria/environmental objectives for the three identified regions,” Peterson said.

While he also said that seaborne thermal coal was “more than a China story”, he adds that at least half of China’s new electricity demand would be met by coal-fired power.

The marketing specialist said India has emerged as the dominant growth market for thermal coal with the country’s coal-fired power capacity to increase from 145 gigawatts to 214GW by 2020.

Glencore has predicted that Indian thermal coal imports will consequently reach 345Mt by 2020 – almost double the existing rate of annualised imports.

Overall, Glencore has forecast global thermal coal demand to grow at 5% per annum in the foreseeable future.

The diversified miner has forecasted met coal demand growth to be less than 2% per annum over the next three years.

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