Xstrata Coal, said Monday it will cut 600 jobs in Australia, affecting both permanent staff and contractors. BHP Billiton also said it is slashing 300 positions due to the closing of its Gregory Crinum mine near Emerald, Queensland.
BHP said the decision to close the coal mine followed a review that had "determined that the Gregory open-cut mine production was no longer profitable in the current economic environment of falling prices, high costs and a strong Australian dollar."
Xstrata said the job cuts were in response to "industry-wide pressures including low coal prices, high input costs and a strong Australian dollar against the U.S. dollar."
Xstrata said it doesn't expect a material impact on Australian production volumes and that the job cuts are focused on scaling back high cost production at some of the company's mines.
The world's largest exporter of thermal coal by volume, Xstrata says its approved expansion projects, including Ravensworth North, will proceed as planned.
Mick Buffier, Xstrata Coal's executive for corporate affairs, government and industry relations and sustainable development told business leaders in Newcastle last month that the cost of bringing on new mining capacity for thermal coal in Australia nearly tripled to $176 a ton over the last four or five years, outpacing a 45 percent rise in other parts of the world, The Wall Street Journal reports.
Buffier also said that this year more than 70 percent of Australia's thermal coal mines are expected to be ranked among the world's highest-cost pits, compared to 2006 when only one-third were the costliest.
The Queensland Resources Council, noting that the state budget to be submitted Tuesday is tipped to impose higher coal royalties and the federal government is reportedly looking at a suite of tax hikes for the resources sector, said that the job-cut announcements "sent a clear message to governments that the industry is not a bottomless pit for revenue."
"Queensland's biggest export industry is in the grip of a perfect storm caused by plummeting prices and rising costs that can only cost more jobs, premature mine closures and the cancellation of some proposed projects," the council's chief executive Michael Roche said in a statement Monday.
Roche pointed out that also on Monday premium coking coal prices dropped more than 7 percent, to a level more than 50 percent those of September 2011.
"Eventually, I hope governments will realize that the rubber band wrapped around their wads of coal cash can't be stretched forever," he said.