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BMA strikes and higher $A to lift coking coal costs: Lynch

THE cost of producing coking coal from the world’s largest supply source, Central Queensland, will become more expensive as unions start applying pressure for higher wages in Enterprise Agreements and the Australian dollar keeps rising in value, according to the Cokal executive chairman Peter Lynch.

Lou Caruana
BMA strikes and higher $A to lift coking coal costs: Lynch

In US dollar terms as the Australian dollar has strengthened to $US0.76.

“The world’s largest producer of seaborne traded coking coal BHP Billiton has made its intentions clear to the biggest union in the coal mining industry, the CFMEU, that it is determined to introduce major changes to work agreements covering its mines in Central Queensland,” he said.

“The CFMEU was quoted in a circular to members that BHPB management were headed to the ‘mother of all fights’

“The CEO of BHPB, Andrew Mackenzie, has reinforced the company’s resolve in a speech to the AFR Business Summit on the 16th of March.

“Many predict the differences will result in considerable industrial unrest and potentially further supply tightening.”

Supply has already tightened as more mines than normal have chosen to use this period to undertake major maintenance activities on key pieces of production machinery, Lynch said.

“Meanwhile demand from buyers such as China has firmed on the back of the government’s desire to provide further stimulus while at the same time reducing loss making domestic coal production to reduce the growing debt required to support uncompetitive mines.

“It has become apparent in recent weeks that this shift in the coking coal market has created stronger interest from not only the parties Cokal is already engaged with, but also from new enquiries.”

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