From the AFR this arvo a few insights into mining costs:
New Hope chief executive Rob Neale said the downturn in the coal industry had yet to bottom out, saying the tough conditions were expected to remain for the next few years.
I agree. Despite the bounces in recent months, which have mostly been about Chinese restocking, both coal prices should test new lows. Thermal is currently at $85 and coking coal is at $146.50.
Back to the story:
G & S Engineering managing director Mick Crowe, who runs a mining services firm based in Mackay, said smaller producers had gone to the wall in the latest downturn.
“We are no longer a low cost producer and smaller producers have been going out of business. The industry needs to make adjustments. We were running on the wrong end of the curve,” Mr Crowe said.
Correct! That’s the lesson that Australian coal has had to relearn the hard way. And it’s the reality confronting LNG as well in a few more years:
Santos Queensland vice-president Trevor Brown, who is running the upstream business for the company’s multi-billion dollar liquified natural gas company, admitted resource companies needed to drive down costs, but it was not all about high wages.
Not yet cognisant enough of the curve.
