Glencore Xstrata scraps Queensland coal export terminal plans

Glencore Xstrata has scrapped plans to build a coal export terminal in Queensland, Australia, citing poor market conditions and excess port capacity, the trading and mining major said on Monday May 13.

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Plans for the coal terminal, which was to be located at Balaclava Island, around 40km north of Gladstone, had been worked on by Xstrata Coal for several years.

“Following completion of the merger with Glencore and a review of the project, Glencore Xstrata has decided to cease its work on [the Queensland coal terminal project], effective immediately,” the company said.

The company said it had concerns about the industry’s medium-term outlook and that its decision was based poor current market conditions in the Australian coal industry, excess port capacity in Queensland, in addition to specific shipping limitations.

Long-term Asian coal demand will drive Australia’s need to increase its coal capacity in an "effective and internationally competitive" manner, Glencore Xstrata said, highlighting the need for the state government to ensure that its ports strategy provides for the growth in coal capacity.

Port Waratah Coal Services (PWCS), the operator of one of the world’s largest coal-handling operations at Newcastle, New South Wales, announced that it had delayed plans to build a $5 billion plus coal export terminal last month.

Glencore Xstrata said, in its first quarter 2013 results on Monday, that Australian coking coal output in the period had increased 29% year-on-year.

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