Glencore puts brakes on coal output

GLENCORE, the world’s biggest exporter of power station coal, will stop production at its Australian mines for three weeks as prices languish at a five-year low.

The decision to halt operations starting in the middle of next month would rein in output in Australia by about 5 million tons, the Baar, Switzerland-based company said on Friday.

That is equal to about 6 percent of Glencore’s Australian coal production last year.

Glencore, led by chief executive Ivan Glasenberg, is tap- ping the brakes on what has been a steady period of growth in coal production.

A slide in prices has forced operators to shut mines as lower-cost producers like Glencore raised output, deepening a global glut.

“There is a broad, bearish tone in the market and investors are focusing on the negative headlines,” Daniel Hynes, a senior commodity strategist at Australia and New Zealand Banking Group.

“So whether this actually supports the short-term price is debatable, but on a fundamental basis it will help.”

The dropped fell 1 percent to £3.25 (R56) at 9.05am in London on Friday.

Glencore, which proposed a merger with Rio Tinto Group in July, reported earlier this month that it increased coal output by 9.2 percent to 40.2 million tons in the third quarter, driven by expansion at energy coal mines in Australia.

Glencore’s Australian coal production last year was 81 million tons, according to a presentation in September.

The price of energy coal from Australia’s Newcastle port, a benchmark for Asia, is down 27 percent this year to $61.85 a ton last week, the lowest since 2009. – Bloomberg