New Glencore and Peabody Energy JV proposed for Hunter Valley

Glencore and Peabody Energy have agreed to form a 50:50 Joint Venture to develop a brownfield open cut coal project located between the existing United and Wambo mines in the NSW Hunter Valley.

 

Expected to commence in mid-2017, the project will realise major synergies between the two neighbouring operations. It will deliver optimal resource recovery and infrastructure use and significantly reduce operating and capital costs.

 

The project, which is subject to relevant State and Federal approvals, is not expected to increase either company’s overall output or annualised export tonnage from the Hunter Valley.

 

“Peabody continues to take positive steps to further reduce costs, improve our competitive position and create value,” said Peabody Energy President and Chief Operating Officer Glenn Kellow. 

 

“This combined operation is expected to deliver substantial synergies to both parties while providing ongoing local employment opportunities and economic contributions.”

 

The announcement was welcomed by Peter Jordan, President of the CFMEU Northern Mining and NSW Energy District, who said the Project would provide continuity of employment for mineworkers. 

 

“It is very welcome news at a time when our region is suffering from substantial job losses in the coal industry. It will contribute towards job security and inject badly needed income into the regional community as well,” he said.

 

The announcement comes a few weeks before Glencore will implement planned production shut downs across their Australian coal operations for three weeks. Glencore says it is attempting to combat ‘the current oversupply situation’ and reduce ‘incremental sales into an already weak pricing environment’.

 

Thermal coal prices have halved from around $US110-130 a tonne in 2011 to just over $US60 a tonne. Glencore has expressed confidence in this short term measure and that balance will be restored in the ‘medium term’.

 

CFMEU National President Tony Maher said Glencore’s move to take some supply out of the market is welcome.