He told The Australian that more mine closures would occur as many were not making money at hard coking coal prices of around $US110 a tonne.
“We’ve seen a 30% reduction in iron ore prices over the past four or five months but metallurgical (or coking) coal hasn’t really gone down much further, which probably tells you the market is starting to bottom out,” he said.
“People are still in a lot of trouble and there is still an oversupply in the market. Production cuts seem to be slowly trickling through but the market never reacts as fast as a rationalist says it should — I think we’re still in for at least another 12 months of subdued, tough pricing, which is obviously going to force some people to make decisions.”
While some analysts view that BHP’s share of coking coal production from the mines it operates will plateau at 47 million tonnes per annum, Valle said BHP would have more production capacity than that.
He shed light on the possible expansion projects if coking coal prices improve, including the Wards Well underground coal project which is adjacent to BHP Mitsui Coal’s Goonyella Riverside complex in Queensland.
This project is yet to make any significant steps in the environmental approvals processes.
But according to Mitsui’s website, BMC aims to have this Bowen Basin project producing “large quantities of hard coking coal by 2017”
Valle also raised the prospect of second longwall at the Broadmeadow mine – also known as the Red Hill project, plus expanding the Caval Ridge open cut mine or even restarting the Norwich Park operations which closed down last year.
BHP’s 1Mtpa-targeting IndoMet coking coal project in Indonesia is also kicking off this year, with Valle adding that this rate could be expanded.
In terms of thermal coal, Valle mentioned the Caroona longwall project in New South Wales, which has faced tough environmental scrutiny for years.