Glencore may shut 4 Australia coal mines: Clarification

Clarifies Glencore's position on potential extension of mine life of Glendell and Newlands. Removes reference to long term carbon emissions targets. Reworded throughout.

Three coal mines in New South Wales (NSW) and one in Queensland owned by Switzerland-based trading and mining firm Glencore will reach the end of their formal mine lives by 2023, contributing to cuts in the firm's guidance for that year to 112mn t from around 140mn t.

The mines are the 4.5mn t/yr Liddell semi-soft and thermal open pit coal mine, the 2mn t/yr Integra underground thermal coal mine and the 3.7mn t/yr Glendell open pit thermal coal mine, all of which are in the Hunter Valley region of NSW, and the 5.5mn t/yr Newlands thermal and coking coal mine in the northern Bowen basin in Queensland.

The four Australian mines that will reach the end of life in 2023 produced 13.1mn t of coal between them in 2019, according to Glencore's factsheets. Any fall in Australian coal exports from the closure of these mines will be partially offset by Glencore's 5mn t/yr Wambo United joint venture with Peabody, which is due to begin production this quarter.

Glencore stopped operating two of the five excavators at Glendell in November on lower coal prices that had already forced the firm to undertake a 2-3 week closure of most of its Australian operations in September-October.

It plans to keep its options open to production back up at Glendell in the shorter term, if the market demands it. The firm is also still pursuing options to extend Glendell's mine life beyond 2023. It submitted to the NSW government in January to expand Glendell to 10mn t/yr and to extend its lifespan by a further 20 years to 2044.

Newlands is also scheduled to reach the end of its mine life in 2023, but could be further extended if the market demands it.

Argus last assessed high-grade Australian thermal coal at $70.33/t fob Newcastle for NAR 6,000 kcal/kg on 4 December, up from $59.38/t on 20 November and from a recent low of $46.18/t on 4 September. It assessed lower grade coal at $46.89/t fob Newcastle for NAR 5,500 kcal/kg on 4 December, up from $37.66/t on 20 November and $35.04/t on 4 September.

The heat-adjusted premium on a NAR 6,000 basis for higher grade thermal coal increased to $19.18/t on 4 December from $12.71/t on 30 October and from $8.65/t at the end of August.

Argus last assessed PCI and semi-soft coking coal prices at $71.25/t and $71.20/t fob Australia, Both prices have been around this level since late April, down from $82/t and $100/t respectively at the end of March.

By Jo Clarke