The hurt so far

FOR a time there it looked as though booming coal would stave off the forces of an economic downturn and rise above other commodities, but a harsh reality hit producers as 2008 came to an end with mine closures and job losses. International Longwall News looks at the losses to date and holds the crystal ball to those on the ground.
The hurt so far The hurt so far The hurt so far The hurt so far The hurt so far

 

Angie Tomlinson

The biggest and most direct hit to the Australian longwall sector so far has been Xstrata’s announcement it was closing its Oaky No. 1 mine in Queensland.

While Xstrata continues to wrangle with the union over redundancies and consulting over the 230 job losses, the global miner was joined by coal giants Peabody Energy and Rio Tinto last week in the cuts.

Rio announced it would slash 50 full-time contractor jobs and 15% of production at its Kestrel longwall in Queensland’s Bowen Basin as the mine scales down its preparation plant to a five-day roster.

Peabody was next in line to say it would cut output this year in Australia and the Powder River Basin, slashing 2 million tons from its Aussie output and 10Mt from the US. Some media reports have suggested contractors have already been laid off from one of Peabody’s mines in Australia.

The three majors blamed slumping coking coal demand. In the wake of the boom some have suggested at least one company has favoured the lucrative spot market at the expense of long-term contracts and the unprecedented and rapid fall of prices has caught some players out with few contracts for their output.

Anglo American came out in mid-December with the announcement it would slash its 2009 capital expenditure by more than half and defer new projects, with coal production to be cut by 10%.

However, the miner affirmed its commitment to coal on Friday stating it would sell off its coal seam gas arm to concentrate on coal mining in Australia.

While news of redundancies surrounded them, the mine personnel who spoke with International Longwall News remained optimistic having not been directly affected.

One mining engineer working on a Queensland underground coal prospect told ILN that while smaller operators will be affected and marginal projects put on hold, the majors “don’t appear to be too concerned – however, capital spend will be closely scrutinised”

“We are still optimistic that we won’t see any major job losses,” he said.

“However, it is expected that our capital spend may be reviewed and we may concentrate on process improvement of our operations – our project pipeline is still moving forward.”

A longwall superintendent working at a New South Wales mine was also cautiously optimistic.

“Morale is still pretty good and the workforce is focused on getting the tonnes out in order to earn as much bonus as possible while the going is still good,” he told ILN.

“At this stage people still feel secure in their jobs mainly because they have not seen the impact firsthand.

“As yet none of the mines in our area have been drastically affected and none of their co-workers or friends have been left without a job.”

Both men agreed that the bottom of the downturn had not been experienced yet, but adversely both mines were continuing to feel the squeeze of the skills shortage.

A Queensland mine manager said the current climate had “changed nothing”

“The skills shortage lag has not caught up yet and we are still experiencing recruitment difficulties,” the NSW longwall super said.

The Queensland engineer added that people tended to be sitting tight at the moment in a game of wait and see.

“We may see the labour market free up a bit and we are likely to see people staying put in the short term to see what will happen – the contract deputy and engineering personnel may opt for permanent roles in the short term,” he said.

While the men agreed the lowest point had not been hit yet, the Queensland mine manager thought coal would be the first to bounce back.

“Coal is fundamental to both energy supply and steel production and so will be an early beneficiary when the upswing comes,” he said.

While those not directly impacted to date feel fairly secure, contractors are remaining edgy as their positions are inevitably the first to go. Walter Mining has already said it expects to lose $A1 million from the closure of Oaky No. 1.

One of the largest culling operations on the coal front has been by Queensland open cut miner Macarthur Coal which announced in December it would scale back its production from the Coppabella and Moorvale coking coal mines and cut some 180 jobs.

The US is also seeing a raft of shutdowns.

Major Eastern longwall operator Consol Energy announced it would close its Mine 84 complex in Pennsylvania with 260 workers to be axed.

Citing costs, challenging pricing and difficult conditions, Walter Industries revealed the permanent closure of its underground Kodiak operation in Alabama early January with 90 contract workers impacted.

The Canadians have also been hurting as a major coking coal exporter.

Grand Cache Coal said last week it would cut output and hack costs through expense, contractor and planned capital expenditure cuts.

Teck Cominco has also come out saying it will make global workforce and production cuts, cutting 1400 job worldwide.

Western Canadian Coal said last week it would also reduce operations at its Wolverine and Brule complexes in northeast British Columbia, with Wolverine under the shadow of complete closure.

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