Argus


Oil & Gas Publishers Note: These layoffs and the weaker demand in the coking coal are just another example of the world wide slowdown. Coking coal is used in steal production. The domino effect of the world Covid-19 pandemic lock down on all consumer markets is only beginning. Shutting down steal production in Australia is only a symptom of an even larger problem.

Sydney, 2 June (Argus) — US energy firm Peabody Energy is looking to reduce the number of workers at its 1.8mn t/yr Metropolitan coking coal mine in the Illawarra region of New South Wales (NSW), as lower prices and weaker demand weigh on Australia’s coal industry.

Peabody Energy - Jobs Reduction - oilandgas360The firm expects to be able to retain two-thirds of its workforce at the Metropolitan mine as it seeks to align its production levels with coal demand that is lower than usual because of the Covid-19 pandemic. The firm is still consulting with unions and staff to finalise production levels and work out operating schedules. The reduction in staffing follows similar negotiations at the firms 2.5mn t/yr Wambo thermal coal and semi-soft coking coal underground mine in the Hunter valley region of NSW.

The Metropolitan mine produces non-premium hard coking coal, with several producers of this grade of product looking to reduce production as prices are at unsustainable low levels because of weaker demand. It also produces some semi-soft coking coal and some thermal coal for export through Port Kembla.

Argus yesterday assessed the premium hard low-volatile coking coal price at $113.75/t fob Australia, up from a low of $107/t on 4 May but down from $163.05/t in mid-March. Argus assessed the non-premium hard mid-volatile coking coal price at $91/t fob Australia and pulverised coal injection grade low-volatile price at $64.75/t, down from $144/t and $98.70/t respectively in mid-March.

Metropolitan produced 1.4mn t of coking coal in 2019, down from 1.7mn t in 2018 and 2mn t in 2016. Peabody prior to the Covid-19 pandemic had been looking for ways to boost its coking coal sales, after it was forced to close its Goonyella North mine in Queensland because of a fire in September 2018.


Legal Notice