Mick Buffier, Glencore’s head of coal operations, has claimed the Australian coal industry is “globally uncompetitive”.
The Sydney Morning Herald reported that Buffier pointed to the Australian dollar as causing costs to “blow out”, making the industry uncompetitive as long as there is no correction to the dollar.
"Australia has moved up that cost curve," Buffier said. One of the reasons for this “is the high Australian dollar, which is not helping. You can say that during that boom period we did lose control of our costs.”
He said that between 2006 and 2011, industry data said the cost of an installed tonne of new mine capacity rose from about US$ 70 to about US$ 170/t. "The rest of the world was sitting at about US$ 120/t. That's part of the explanation."
Speaking more generally about the depressed coal market, Buffier said he expected a return to business as usual. However, he remained cautious on giving any exact date for the current oversupply of coal to correct itself.
"Both supply and demand are continuing to rise [....] Ultimately that oversupply will be caught up. Will it occur at the end of next year? Probably not, but eventually it will come back. Over time, with less investment, that will correct [...] You only have to go back through the past 30 or 40 years and this has happened many times," Buffier said.
Edited from various sources by Sam Dodson
Read the article online at: https://www.worldcoal.com/coal/05092014/australian-coal-industry-uncompetitive-1291/