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Australian coal mining boom ends as coal prices go south

Steel News - Published on Fri, 08 Jun 2012

Reuters reported that falling coal prices and soaring costs have forced Australia\'s producers to start trimming output and letting go of some workers, hurting miners, rail and port operators and potentially threatening plans for more than $30 billion of investment in new mines.

Coal producers have been hit by a triple whammy of rising wage, equipment and fuel bills plus new taxes, growing coal exports from the United States, and softer demand in China for thermal coal in power plants and coking coal in steel mills.

New coal mines are particularly vulnerable due to the competition from other sources and soaring costs. In contrast, miners are still expected to pour funds into expanding iron ore operations in Australia, where they still make fat profit margins even with iron ore prices down from last year\'s highs.

Analysts say the coal projects most likely to be shelved are those in Queensland\'s untapped Galilee Basin, where India\'s GVK and rival Adani Enterprises are among the biggest players, while a Rio Tinto project in New South Wales is also seen as likely to be delayed.

Australia\'s producers are not the only ones suffering, with miners in Indonesia also feeling the pinch from drop in prices. But operators in Australia face the extra challenge of soaring labour costs plus carbon and mining taxes taking effect in July.

Source - Reuters


Posted By : admin on Fri, 08 Jun 2012
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