The news, which comes after Sumitomo wrote down its Australian coal investments by 30 billion yen, is another blow for the Australian coal industry, which last week learnt that the BHP Mitsubishi Alliance would be axing 700 positions from its Queensland coal mines.
An expected 300 employees would be affected by the Isaac Plains closure, which follows a decision by the JV partners to reduce production and staff numbers by 108 in December 2012.
In response to the recent downturn of the international coal market, Sumitomo announced its decision to place the Isaac Plains coal mine on care and maintenance, with plans to cease operations by end of January 2015, it said.
“Impairment cost in certain coal mining projects in Australia will be recognised due to the decline in prices for coal to a level below the initially anticipated range,” Sumitomo said.
The decision is as a result of the “challenging market conditions and unsustainable financial losses of the operation due to low coal prices, high input costs and strong Australian dollar”, according to a statement by Vale.
A spokesman on behalf of the JV partners confirmed that at this stage the company had advised its employees and the operators of the mine of its intentions and had instructed them to start a consultation process with employees and their representatives.
Leighton Contractors holds the mining contract for Isaac Plains while Ausenco holds the coal handling contract.
The Leighton contract, with the Isaac Plains Coal Management JV company, includes a range of contract mining services.
The scope includes provision for all statutory roles, the implementation of the site’s safety and health management system and operation of the mine’s dragline (a BE 1370 DC drive electric dragline with a 49 cubic metre bucket).
The mine has an expected production capacity of 2.8 million tonnes and the scope includes 514km of drilling and more than 34 million bank cubic metres blasted.
In May this year Vale announced that it would be placing its Integra mine in New South Wales’ Hunter Valley on care and maintenance with the potential loss of 500 jobs.