Glencore Xstrata cuts metallurgical coal production

Glencore Xstrata has joined a growing list of miners to cut metallurgical coal production. The Swiss company announced a 17% drop in its Australian coking coal output in Q1 of this year as it “moved away from certain high cost mines and areas […] and focused on higher margin thermal coal production.''

The company joins seven North American producers to have cut back on production of the steel-making ingredient, including the likes of Arch Coal, Alpha Natural Resources (ANR) and Teck Resources.

“The Canadian and US producers have cut about 13 or 14 million t out of the trade since March and that has been one of the key supports for the price over the last month or so,'' said UBS analyst, Tom Price, adding that there may be more production cuts to come. ANR said in its Q1 results statement that Asian coking coal prices had become “unsustainable” for US producers and would remain until 2015.

Elsewhere, Glencore Xstrata recorded a 3% rise in Australian thermal coal production to 14.1 million t on the back of productivity improvements at its Bulga mine and the ramp up of Revensworth North and Rolleston phase 1. Production of thermal coal from its Colombian operations also improved on the same period last year, but South African output dropped by 3% following wet weather, industrial action at Goedgevonden and the impact of mining through low-yield areas as some operations. 

Written by Jonathan Rowland

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