mining company profits are suddenly under attack from several directions at once
Whereas only a third of Australian thermal coal mines ranked among the world’s highest-cost pits in 2006, this year it will be over 70%, Mick Buffier, Xstrata Coal’s executive for corporate affairs, government and industry relations and sustainable development, told the Hunter Business Mining lunch.http://www.affordabledesignerdresses.com/
Given that thermal coal prices are stuck around US$90 a ton amid concerns over China’s demand and a re-routing of surplus U.S. coal production to Europe, there appears a strong argument for Xstrata to follow peers like BHP Billiton BLT.LN +0.87% and Rio Tinto in scaling back output and spending in Australia until market conditions improve.
After years of strong growth, mining company profits are suddenly under attack from several directions at once.
The Australian dollar remains above parity versus the greenback, despite it losing key support as commodity prices fall. Input costs ranging from the diesel oil used in mining trucks to electricity are up, while labor is more expensive than before as resources companies compete for a limited pool of skilled workers. On top of that are new taxes: Xstrata has previously estimated Australia’s carbon levy will cost it up to 250 million Australian dollars (US$259 million) a year.http://www.affordabledesignerdresses.com/la-femme-prom-dresses-c-1.html
It’s not just thermal coal production that’s under pressure. Australian mines producing coking coal, a key ingredient in steelmaking, barely featured in the top quartile in terms of costs in 2006. Now, one in five pits are among the costliest to run, Xstrata says.
BHP said Monday it will close the Gregory metallurgical coal mine that it jointly owns with Japan’s Mitsubishi Corp 8058.TO +1.53%. in Queensland state because the operation is losing money.
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