Billiton, the mining group, has been forced to cut coal output as a result of the low prices available.
The world's biggest exporter of steam coal, which is used in power stations, is to reduce export volumes from its Ingwe operations in South Africa, with the loss of 2,000 jobs. The company said the move was a reaction to a 4 per cent drop in prices in deals recently struck in Japan, a key market.
The cuts at Douglas and Koornfontein collieries, east of Johannesburg, will save over $62m a year, by closing parts of the collieries, and reduce Ingwe's exports by some 8 per cent or 2.2 million tonnes. The company said the cuts would return both collieries to being net positive contributors to Billiton.
Investors welcomed the news and the company's shares closed up 16.5p at 311.75p. Peter Davey at SG Securities, said: "All the coal producers have to cut costs dramatically, there is just too much coal around. They're fighting for survival."
Billiton provides around 30 million tonnes of the 300 million tonnes of world steam coal exports, with 25 million tonnes coming from Ingwe's 11 collieries in South Africa.Reuse content