Australian Metropolitan coal mine shutting for 2 months

US energy firm Peabody Energy will close its 1.8mn t/yr Metropolitan coking coal mine in the Illawarra region of New South Wales (NSW) from early January to the end of February, as export orders dry up with China's import ban on Australian coal and domestic contracts end.

The eight-week closure from 4 January, which will put most workers at the mine temporarily out of work, was caused by a lack of orders for the non-premium hard coking coal, semi-soft coking coal and thermal coal produced at the mine, according to the Construction Forestry Mining and Engineering Union. Union official Bob Timbs blamed the diplomatic dispute between Canberra and Beijing for exacerbating the problem by stalling exports of Australian coal to China. A contract to supply coal to BlueScope Steel's nearby Port Kembla steelworks has also ended, leaving order books empty, he added.

Several other Australian mining firms are looking to extend their usual shutdowns lasting a few days over Christmas and the new year to at least a couple of weeks because of growing stocks of thermal and coking coal in Australia. But Peabody is the first to confirm that a mine will close for such an extended period of time over the Australian summer holiday month of January and beyond. Several central Queensland coking coal mines are planning to take a month off over Christmas, although the mining firms are yet to confirm this.

Peabody cut a third of the Metropolitan workforce in June to try to align its production levels with lower coal demand because of the impact of Covid-19 pandemic. This followed similar negotiations at the firm's 2.5mn t/yr Wambo thermal coal and semi-soft coking coal underground mine in the Hunter valley region of NSW.

Several producers of non-premium metallurgical coals have cut production as prices are at unsustainable low levels because of weaker demand.

Argus yesterday assessed the premium hard low-volatile coking coal price at $102.55/t fob Australia, down from $136/t in early October ahead of China's import ban on Australian coal. Argus assessed the non-premium hard mid-volatile coking coal price at $93.65/t fob Australia and pulverised coal injection grade low-volatile price at $71.30/t, down from $114.50/t and $74.45/t respectively in early October.

Metropolitan produced 1.4mn t of coking coal in 2019, down from 1.7mn t in 2018 and 2mn t in 2016. Peabody prior to the Covid-19 pandemic had been looking for ways to boost its coking coal sales, after it was forced to close its Goonyella North mine in Queensland because of a fire in September 2018.

By Jo Clarke