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Today's Australian is reporting Glencore's plans to shutdown its 17 Australian coal mines in September for "several weeks" due to depressed thermal and metallurgical export coal prices.
Around 10,000 Glencore staff will be required to take extended leave during the proposed shutdown period. Glencore told the paper "the shutdown measures would allow it to align production levels with market demand while providing the flexibility to ramp back up as economies recover from the effects of Covid-19".
Glencore describes itself as one of the world's largest seabourne thermal coal exporters, with combined Australian production reaching 103-million tonnes in 2018/2019.
In Queensland the shut down will impact Aurizon's Newlands system, where the Collinsville and Newlands mines contribute about a third - 8.75-million tonnes - to the the total annual tonnage moved through to Abbot Point.
Oaky Creek, Hail Creek and Clermont add 19.45-million tonnes to Aurizon's Goonyella System - around one fifth of the system's annual tonnage, and have been the source of traffic 1Rail's start-up operations in the region.
The 15.177-million tonnes Rolleston mine feeds into Aurizon's Blackwater system and the Wiggins Island Coal Export Terminal, which is partly owned by Glencore.
We've got to remember coal is many different things, and not all coal is created equal.
Aurizon's rail network carries the world's largest seabourne trade of metalurgical coal - 143-million tonnes in 2018. Metalurgical coal and its carbon content remain the only economic means of smelting iron ore into the carbon iron alloy known as steel.
Most steel mills from India through to South Korea and Japan, and to a lesser extent China, rely on the metallurgical (coking) coal transported by Aurizon or on its network. By comparrison, NSW produces just over 25-million tonnes of metallurgical coal. Metallurgical coal is Aurizon's trump card and as long as iron ore is being turned into steel by conventional steel mills, Aurizon will have a coal business.
Glencore, more so than most other miners in Australia, is very heavily exposed to thermal coal pricing and demand. While BHP's coal production in Queensland is almost entirely metalurgical, 69% of Glencore's Queensland production is thermal coal.
Its recently announced 20-million tonne thermal and coking coal Valeria project near Emerald is designed to increase Glencore's metalurgical coal production as well as allowing it to close more expensive to operate thermal coal mines. Glencore's coal business in Queensland represents around 19.5% of the tonnage moved on Aurizon's coal network by Aurizon, Pacific National, 1Rail and BMA (the later hauls BMA coking coal exclusively).
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