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Glencore to close Australian coal mine due to low price
[SYDNEY] Glencore will close its Tahmoor coal mine in Australia by early 2019, the latest example of low coal prices decimating the sector.
Glencore is one of Australia's largest coal producers running 18 mines and employing some 7,650 workers.
Glencore said it begun consultation with the 350 employees at the Tahmoor mine, which has been operating since 1979 and last year produced 2.1 million tonnes of metallurgical coal used in steel making.
"The decision has been made as a result of continued low prices in global coal markets, which has meant the economic return from reserves still available at Tahmoor are not sufficient to warrant the investment required to mine them," Glencore said in a statement.
Like other miners, Glencore has been hit hard by the collapse in commodity prices linked to slowing demand from China. It has also slashed production of copper and oil as well as cutting investment and costs.
Global metallurgical coal prices have dropped from more than US$300 a tonne in 2011 to around US$94 in step with weakening steel prices.
Leading global coal producer Peabody Energy Corp filed for US bankruptcy protection in April after a sharp drop in coal prices left it unable to service debt of US$10.1 billion, much of it incurred for an expansion into Australia.
Last year, Chinese-controlled coal miner Yancoal Australia cut close to half the jobs at two of its collieries after losses over two years climbed to more than A$1 billion (S$1 billion).
In one of the most glaring examples of exiting coal at any cost, Brazil's Vale, sold a mothballed coal mine in Australia to a local operator for A$1. At peak coal prices, the mine was worth around A$500 million.