The world's largest shipper of thermal coal, Glencore Xstrata Plc ordered a work stoppage on its Balaclava Island export terminal located at Queensland, Australia. The reason for the work stoppage is the overcapacity of production as well as poor marketing conditions.
Other factors in making the decision was specific shipping limitations as well as concerns about the outlook of the firm in the medium term, according to an emailed statement from the mining conglomerate. The export terminal had a projectd export capacity of 35 million tons per year, according to the mining company but the continued decline in market prices makes the project unprofitable. According to data from IHS McCloskey, spot coal prices have fallen 4.4% this year to just US$86.65 per metric ton.
Glencore Xstrata is just one of the mining companies that are putting off projects and decreasing workforces to cut down on costs due to weakened demand and declining prices. Coal contract prices have been at its lowest in the past month since 2009 according to two sources familiar with the operations but spoke on condition of anonymity.
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