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World Coal
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January 2016
Coal News
Coal News
INTERNATIONAL
Majors continue to wrestle with impact of commodities downturn
L
ast month saw two of the world’s
biggest mining companies,
AngloAmerican and Glencore, announce
significant measures to counter the
downturn in the mining industry.
AngloAmerican has put forward
proposals that could lead to the company
losing about two-thirds of its workforce and
assets as mines are sold or closed.
“We are setting out an accelerated and
more aggressive restructuring of the
portfolio to focus around our ‘Priority 1’
[assets],” Mark Cutifani, CEO of Anglo said
at a recent investors day.
The company will also aim for
US$3.7 billion of cost and productivity
improvements by 2017, while CAPEX will
be cut by a further US$1 billion to the end of
2016 with a US$2.9 billion aggregate CAPEX
reduction for 2015 – 2017 compared to
original guidance.
“As we redefine our operational
footprint, we are aligning our organisation
to ensure optimal efficiency and
effectiveness,” continued Cutifani.
Meanwhile, Glencore will reduce its 2016
coal production by 22 – 27 million t
compared to its original guidance, the
company said in an investor presentation.
This comes on top of the 20 million t of
managed production cuts in coal output in
2015. The company’s coal production
guidance for 2016 now stands at
127 – 133 million t.
The cuts to coal output form part of a
swath of production cuts that will reduce the
mining and trading giant’s copper, zinc,
lead, nickel, ferrochrome and oil production.
Glencore also said that it was increasing its
debt reduction target to US$13 billion from
US$10.2 billion by the end of 2016, having
already achieved US$8.7 billion of savings.
As well as production, the company is
taking an axe to its CAPEX, reducing it from
US$11 billion to US$9.5 billion over 2015 and
2016 with cuts coming to coal projects in
Australia and SouthAfrica.
“We want to have the balance sheet in a
position where the ‘what ifs’ don’t affect us,”
Glencore CEO, Ivan Glasenberg told
investors, referring to an incident last year
when hedge funds questioned whether the
company’s equity would retain any value if
the copper prices fell to under US$4000/t.
O
ver the past month, CIMIC
Group’s global mining contractor
business, Thiess, has been extending,
winning and securing mine operation
contracts worth over AUS$2.5 billion
across Australia and Mongolia.
First, the company was awarded a
contract to operate Glencore’s Mt Owen
coal mine in the Hunter Valley of New
South Wales. The contract is expected to
generate AUS$760 million in revenue for
Thiess and builds on the contract miner’s
longstanding relationship with the
mine.“Our ongoing work at this
geologically complex mine is testament to
the relationship with Thiess and Glencore
and the expertise within our organisation,”
said Thiess’ Managing Director,
Michael Wright.
Meanwhile, in Queensland, Thiess
announced contracts with Jellinbah Group,
QCoal Group andAnglo American.
The Australian mining contractor was
awarded a contract extension worth
AUS$1.3 billion by Jellinbah Group to
continue its operations at Lake Vermont coal
mine in the Bowen Basin in Central
Queensland, Australia. The three-year
contract extension continues Thiess’ turnkey
mining operations at the opencast mine
until December 2021, continuing a working
relationship that goes back to 2007 when
Thiess was contracted to build the mine
infrastructure, including coal handling
preparation plant, site office and workshop.
Also in Queensland, Thiess won an
AUS$250 million contract from QCoal
Group to operate the QCoal Northern Hub
mines, in Queensland’s Bowen Basin. The
contract will run for three years with an
option for a one-year extension and covers
the continuation of operation at the Sonoma
and Drake coal mines.
Additionally Thiess gained an
AUS$115 million contract to continue
operating the southern pits of the Dawson
coal mine in Central Queensland. According
to the company, the new two-year
agreement with mine owner Anglo
American builds on a long‑standing
involvement at the mine. Under the new
contract, Thiess will provide mining
services including the removal of
overburden and coal mining.
Away from its home market and Thiess
signed a four-year contract extension with
Mongolian coal miner, Energy Resources, to
operate the Ukhaa Khudag (UHG) coal
mine, in southern Mongolia. The contract
extension follows the current eight year
agreement signed in 2008 and results in
Thiess continuing mine operations and
maintenance delivery until 2022.
Thiess is responsible for mining services
at the UHG mine, including fleet operation
and maintenance for overburden stripping,
coal mining and blast drilling under an
alliance structure, with involvement also in
mine planning and health, safety and
environmental management. This extension
is set to deliver up to AUS$1 billion of
revenue during the next seven years.
INTERNATIONAL
Thiess announces contract wins in Australia and Mongolia
