Workers at Glencore’s Ulan Mine will have an unexpected Christmas break, following the announcement that Swiss-based commodity trader Glencore will suspend its Australian coal business for next month to avoid pumping coal into an oversupplied market.
Glencore surprised the market on Friday by saying it would shut its Australian mines for three weeks, starting mid-December, shaving about 5 million tonnes of output.
Staff will be forced to take three weeks paid annual leave as a result of the suspension.
Glencore has 13 Australian mine complexes, including about 20 mines and employs about 8000 staff.
The mining company blames low coal prices and a glut of supplies for the decision.
The price of steaming coal, which is mostly used to generate electricity, has halved over the past three years as producers have lifted supplies so they can profit from an earlier price surge caused by demand from China.
Glencore says the shutdown is due to the “current oversupply”.
“We remain confident in demand growth ... and believe the supply and demand balance will be restored in the medium term.”
As many as one coal mine in three in Australia was estimated to be losing money, the head of Glencore’s coal operations in Australia Mick Buffier said recently, adding a lower currency was needed to help bail out the industry.
The closure followed moves by China to block imports of low-quality Australian coal and the decision to put a tariff on some coal imports.
Other coal companies would take advantage of the shutdown, the coal miners union warned, while slamming the company for not warning employees and not seeking other ways to cut output.
“Glencore’s reduction in production will most likely be met by increases by other mine operators,” CFMEU national president Tony Maher said.
“Growing casualisation in the industry means the shutdown will be a disaster for labour hire workers who will simply be told they’re not needed over Christmas.”
The announcement follows news earlier this month that Moolarben would cut around 25 full-time positions before Christmas.