Xstrata begins coal job cuts in Australia

Xstrata Coal (LON:XTA) began to reduce its workforce across its Australian coal operations by firing its first 40 permanent employees out of the 600 announced cuts.

The Swiss miner’s measure, which affected workers from at its Ulan coal mine in New South Wales was announced in August and confirmed in September. Xstrata has blamed sinking prices for both coking and certain kinds of thermal coal for this decision.

With today’s cuts the diversified miner joins an expanding list of coal producers that have made staff cuts at specific Australian operations. BHP Billiton, Ensham Resources, Rio Tinto and Peabody Energy have also recently reduced their Aussie workforce in light of the suffering coal market.

The Australian resources sector in general and iron ore miners in particular have been hampered of late by burdensome costs and ailing spot prices for commodities. Diminishing demand from China due to slowing growth has been the chief factor behind enervated price levels.

Mining companies’ demand for contractors fluctuates with shifting market conditions. In preceding coal market declines workers were some of the first to go, as companies usually have fewer contractual obligations towards them than permanent staff. However, big miners are letting go long-term employees in Australia, in what is being perceived as a clear sign of the downturn affectin Australia’s resource sector.

The IMF contributed more dismal news for the Australian mining sector yesterday, trimming the country’s growth forecast for 2013 to 3.0% from 3.5%.


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