News Wrap

IN THIS morning’s News Wrap: Coal mines in fight for survival; Leighton focuses on cost cutting as contracting sector deteriorates; and union men bury axe to take Rio.

Staff Reporter

Coal mines in fight for survival

The coal industry is fighting for survival as more than half of thermal coal mines are operating at cash losses due to low prices, the strong Australian dollar, high royalties and costs and the impact of the carbon tax, according to the Australian Financial Review.

Research by consultants Wood Mackenzie, commissioned by the Australian Coal Association (ACA) that has recently been shown to MPs in Canberra, has found coalmines have lost their competitiveness compared with overseas rivals over the past four years.

“I think [the coal industry] is in crisis,” former Macarthur Coal chairman Keith De Lacy said.

“It is running into a perfect storm.”

The research shows more than 20% of coking coal mines have negative margins and 52% have margins of less than $10 a tonne at current coal prices, including royalties and capital needed to sustain production.

Leighton focuses on cost cutting as contracting sector deteriorates

Leighton Holdings deputy chief Peter Gregg will accelerate cost cutting in an attempt to maintain margins and earnings in a period of “stress” in the deteriorating mining contracting sector, according to the AFR.

The chief financial officer, who was recently appointed deputy CEO to manage costs at Leighton’s operating companies Thiess, John Holland and Leighton Contractors more tightly, said the emphasis on cost cutting would be one of the main messages at Leighton’s annual meeting on Monday.

“There is no doubt we’re seeing stress in the sector, and we’ve got to execute things differently now it’s not all about growth,” Gregg said.

“We think there’s a bigger overhead reduction story for us. After the unfettered growth that the company has seen over the last decade, there is an opportunity for us to redefine how we do things and maintain the margin.

Union men bury axe to take Rio

Two of the nation's biggest unions have signed a historic pact to try to start re-unionising Rio Tinto's iron ore operations, ending 30 years of bitter hostility that officials concede helped the mining giant create a non-union fortress in the Pilbara, according to The Australian.

The right-wing Australian Workers Union and the left-wing Construction Forestry Mining and Energy Union have signed an alliance aimed at jointly organising the 15,000-strong non-union workforce employed by Rio in northwest Australia.

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