Glencore shutting Australian coal mines over Christmas
In an effort to counter weakness in global fuel markets, mining and commodities trading giant Glencore (LON:GLEN) has decided to shut down all of its Australian coal mines for three weeks over the Christmas holiday season.
The Swiss-based company — Australia's largest coal producer — said the decision would allow it to avoid taking more drastic measures, including closing those or other mines for much longer.
According to The Australian, the firm had looked at a variety of options to curb Glencore’s output into a seaborne market already overstocked with coal. The options pondered were halting production at one of its least profitable mines for a year, the paper reports.
“This is a considered management decision given the current oversupply situation and reduces the need to push incremental sales into an already weak pricing environment,” Glencore said in a statement Friday.
It added the shutdown would cut output from its Australian operations by around 5 million tonnes. But the miner said it remains confident that demand growth for its coal will restore the supply and demand balance over the medium term.
Roughly 8,000 of the company’s employees will be forced to take annual leave over the period, and any staff who do not have enough leave will be required to bring forward some of next year's holidays.
Prices for Glencore’s core Aussie production, thermal coal, have roughly halved over the past three years from about $110-130 a tonne to just over $60 a tonne.
The company owns 20 coal mines at 13 mine complexes across NSW and Queensland, which produced more than 80 million tonnes of thermal and coking coal in 2013 and employed around 8,600 people.
In March the company announced it was closing its Ravensworth underground coal mine (pictured) in the Hunter Valley, due to falling prices and stock surplus in the market.