Anglo American plans coking coal output cuts

Anglo American plans to cut coking coal production over the next few months in the wake of falling prices and high costs, according to a Wall Street Journal report.

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“We are going through a planning process where we will adjust to the market conditions and, in the short term, we will cut back. It’s times like these that really are the right [opportunity] to re-evaluate things,” Seamus French, the miner’s chief executive for metallurgical coal, was quoted as saying in the report.

French said any cuts would be made on a case-by-case basis across its operations but the focus will be on those with weaker margins.

The miner, however, will not be dropping any growth projects altogether and remains committed to tripling coking coal production by 2020, the report noted.

“You can’t completely throw overboard long-term plans,” French reportedly said.

Anglo American could not be reached for comment at the time of writing.

The miner produced a total of 8.59 million tonnes of export coking coal in the first half of this year, a 40% increase over production levels of 6.11 million tonnes in the first half of 2011.

It is the latest mining major to embark on cost-cutting measures.

BHP Billiton is closing the Gregory open-cut mine and dropping plans to build coking coal mines and infrastructure.

Xstrata Coal is slashing 600 jobs while Rio Tinto too is reducing headcount across its coal operations in New South Wales.

Last week, Anglo American reportedly agreed with Japan’s Nippon Steel Corp to set the fourth-quarter contract price for its top-quality coking coal at $170 per tonne fob.

The price represents a 24% cut of the third-quarter’s $225 per tonne fob, and is nearly 50% lower than last year’s high of $330 per tonne fob.

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