The world's largest private-sector coal miner Peabody Energy Corp said yesterday that it would cut 400 positions at its Queensland and New South Wales coal mines in order to reduce costs amid global economic downturn and glut in coal supply.
Just a few weeks ago, the US company, with coal mining operations in the US and in Australia, had cut 450 contractor positions in Australia. The new job cuts will affect 170 employees as many of the 400 positions have not been filled.
According to a Peabody spokesman, the job cuts have been made to ''align the company's workforce size with other cost-reduction activities''.
A slump in commodity prices have prompted several global miners to cut costs through various measures including job cuts and shelving or cutting back capital expenditure and exploration plans.
Prices for thermal coal, used in power plants, have dropped over 30 per cent in the last two years to around $88 a tonne, while for coking coal, used in steel plants, prices have fallen about 40 per cent to around $130 a tonne.
In June, mining giant Glencore Xstrata axed 450 jobs at its two Queensland coal mines citing lower coal prices and high input costs as the main challenges.
Australian mining services company Downer EDI also laid off 185 workers in a Queensland mine recently. Other mining giants BHP Billiton, Rio Tinto and Barrick Gold have also been streamlining their operations by resorting to job cuts in recent months.
Criticizing the job cuts, workers' unions demanded that mining communities should not be made to pay the price for investors demanding the same returns as those seen at the height of the boom.
"At the boom's height, companies like Peabody were falling over themselves to take advantage of the record market prices, and in doing so allowed their costs to blow out," construction, forestry, mining and energy union secretary Andrew Vickers said.
St Louis, Missouri-based Peabody serves metallurgical and thermal coal customers in more than 25 countries across the globe.
Yesterday, Peabody reported a sharp decline in its June quarter profit due to weak coal prices and high operating costs, despite the company's cost saving measures.
Net profit plunged 56 per cent to $90 million, down from $205 million for the same quarter a year ago. However, the overall figure was helped by a significant tax benefit of $185 million.
Revenue dropped 13 per cent to $1.73 billion, lower than analysts' forecast.
Nevertheless, increasing demand from China and India is expected to drive the company's seaborne market to 1.2 billion tonnes this year. While the supplies remain at elevated levels, the world's largest producers, China and the US, have reduced production by 4 and 5 per cent so far this year, and the company expects additional supply cutbacks in the second half.
Production boom from Queensland coal mines is continuing with exports jumping 15 per cent in the first six months of the year.
Peabody's chairman and CEO Gregory Boyce said, "Our progress in reducing capital and moving our operations down the cost curve highlights the actions we are taking to succeed in all market conditions.''
Operating costs fell 6 per cent to $73.39 a tonne compared to $78.26 a year ago. The company has reduced its 2013 capital targets by $100 million to $350-$450 million.
In the second quarter, the company reduced debt by more than $100 million and had an ending cash balance of $518 million.