Anglo American PLC plans to cut coking coal output in the coming months as it reviews existing operations and projects in the backdrop of weak prices and high costs, the miner's coking coal chief said today warning that industry-wide cuts would continue to deepen, according to a report in MarketWatch.
In the scenario of falling prices, coal producers have raised questions over the profitability of the sector in recent months particularly in Australia where resources minister Martin Ferguson last week said the nation risked missing out on new projects that could be worth billions of dollars.
The report quoted, the chief executive of Anglo's coking coal business Seamus French as having said in an interview that the company was going through a planning process where it would adjust to the market conditions and in the short term cut back production.
Anglo American is the world's third largest producer of coking coal or metallurgical coal used primarily in steel making, and operates five coking coal mines in Queensland and one in New South Wales.
French added it was times like these that really were the right (opportunity) to reevaluate things, saying the market had become over supplied after 2011 with mining companies increasing production on strong prices.
Mining companies are now focused on cutting costs and reconsidering investment plans as demand from China, a top consumer of many commodities, has declined in the slowing economy, and as prices of industrial commodities hit multi-year lows.
The spot price of coking coal, Australia's second-largest export, is down by half over the past 12 months with the easing of Chinese steel demand.