The world’s biggest commodity trader Glencore says it’s committed to Hunter Valley coal but has warned that future mine closures are on the cards as it continues to cut costs.
Glencore’s head of global coal assets Peter Freyberg told a Hunter business chamber function that the Hunter Valley region represented the biggest part of the company’s global coal portfolio employing over 3800 people. But he warned that the company’s decision earlier this year to cut Australian coal exports by 15 million tonnes might be a sign of more reductions.
He made it clear Glencore was not prepared to run unprofitable coal mines.
“Glencore will not push incremental volumes into markets that don’t need them,” Mr Freyberg said. ”Further, we won’t and can’t operate mines that don’t make a financial contribution.”
He foreshadowed more cuts to boost profitability of its existing mines.
“I’ve asked my managers to challenge every input cost into the business. This does and will impact suppliers,” he said.
“We do support local businesses, but only on the basis they are efficient and can compete in terms of cost and quality. Just like our mines, you can’t rely on the boom times alone – you have to be robust through the cycle.”
However, he saw the current slump in coal prices which are down about 60 per cent over the past few years as cyclical, not structural.
Glencore’s share price has been hammered this year amid questions about the debt-ridden company’s future.