Brazil-headquartered miner Vale will close production at its Integra coal mining complex in New South Wales in Australia by the middle of Q3 2014, the company said.
Vale has already started to decrease production at the mine, which produced 1.4m tonnes of metallurgical (coking) coal and 87,000 tonnes of thermal coal in 2013.
“The mine has already been placed into care and maintenance,” Vale’s investor relations Claudia Rodrigues said.
Integra’s main export market was China where demand growth for imported coal has slowed down in the past year because of falling domestic coal prices and increased government focus on environmental policies.
Coal miners around the world have been battling with global oversupply, lacklustre demand from European and Chinese utilities, depressed coal prices and high production costs that have squeezed profit margins and made it difficult to continue mining operations.
Further mine closures are expected mainly in Australia in the second half of 2014 due to low global coal prices, which have made coal mining economically unviable, market sources told ICIS.
ICIS data show that physical prices of 6,00kCal/kg FOB Newcastle coal fell to $70.35/tonne at the end of June – the lowest level recorded since ICIS started collecting the data in July 2010. Similarly, FOB prices of 5,500kCal/kg Australian coal – primarily sold into China and India – fell below the $60.00/tonne in the first week of July, however, despite the low price one source said Australian miners were still making around $5.00/tonne of profit at that level.
Vale owns 61.2% of the Integra mine, with the remaining stake held by a group of Asian manufacturers, steelmakers and power companies, including Toyota Industries, Posco, JFE Holdings and Nippon Steel. Stacy Irish