Miner shuts down mine
COAL price not enough to change Peabody’s mind about CQ mine which once employed 900.
Wednesday 11 January 2017
Twelve months after first flagging it, US based coal miner Peabody has put the Burton coal mine North West of Nebo into care and maintenance costing around 300 jobs.
The company - which is in administration (US Chapter 11) foreshadowed the closure in February last year, after reporting losses of around $A2.6 billion due to historically low coal prices.
However, there had been some hope locally that the massive rally in coal prices in the last part of 2016 may have been enough to extend the mines life.
While the price rally has delivered the miner a totally unforeseen $767 million windfall - which will help with their attempts to come out of administration later this year - it appears they don't think the prices will last.
“Peabody Energy can confirm completion of the transition of the Burton mine into a care, maintenance and rehabilitation phase in December following successful completion of the Thiess mining contract,” a Peabody spokesperson told Shift Miner.
“Peabody continues to undertake progressive rehabilitation at the mine, and is committed to its Australian platform and the Bowen Basin, as a core region where we are one of the world’s largest suppliers of high-quality seaborne coal for electricity generation and steelmaking.”
In a plan of reorganisation released before Christmas, Peabody significantly revised their outlook for their Australian coal business.
Instead of the Australian thermal and coking coal business losing about $US20 million they are now expected to have made around $US225 million in 2016.
This year they expect to earn around $US325 million from their Australian coal mines which represent about a third of total earnings before interest, tax, depreciation and amortisation.
That is up from the expected profit of around $US10 million predicted last year.
While much of the focus locally has been on the 300% growth in coking coal spot prices, Peabody has been more interested in the thermal coal prices which also doubled.
In August last year, the company said it planned to shift its focus to thermal coal where it believed it could extract profits of between 14 and 23 percent over the next five years, compared to losses of 3 percent through to a maximum annual profit of 11 percent in coking coal.
The major shift away from steelmaking coal required a major “review and optimisation” of all it's Queensland mines which are significantly geared toward thermal, coking and PCI coal mining.
Peabody acquired the Burton mine in April 2004, and in 2014 the mine produced 2.1 million tonnes of coal via its operations contractor Thiess who employed around 900 people.
However midway through 2014, Peabody slashed the mine's workforce by two-thirds as it responded to falling coal prices.