Glencore Restarting Australia Coal Mines
Glencore Plc on Monday said it was restarting coal mining operations in Australia, following a three-week suspension aimed at combating a global supply glut made worse by protectionist trade measures introduced in China.
The suspension by the world's biggest exporter of thermal coal underscored producer concerns about over-supplied coal markets, though it did little to turn depressed coal prices around.
"We are in the process of resuming coal production, as planned," Glencore said in a statement emailed to Reuters.
Thermal coal spot prices declined steadily during 2014 in response to surplus supply and measures implemented by Beijing to support its domestic coal industry.
Spot thermal coal priced at Newcastle port, an Asian benchmark, sits at a five-year low of $61.94 a tonne - less than half its post-2008 recession peak of $136.30 in January 2011.
World thermal coal trade is estimated to have declined by 4.5 per cent to 1.023 billion tonnes in 2014, driven largely by lower imports into China following the introduction of trade targets, according to Australia's Department of Industry.
With nearly 70 percent of Chinese coal mines in the red, the government has rolled out support measures, including quality restrictions and reinstatement of tariffs for imports, and a cut in export taxes.
As part of the initiative, state-owned utilities were directed to reduce coal imports between September and December, with utilities that failed to comply penalised through a lower electricity generation quota.
Glencore has calculated its temporary shutdown would cut output by 5 million tonnes - 2.5 percent of Australia's forecast 2014 thermal coal exports.
Reporting by James Regan