Take-or-pay system forces coal mining companies to increase production
What factors are at play causing the Australian coal mining industry to take a cold, hard look at its production guidance targets in 2015?
With Australian coal mining companies producing more coal than we’ve seen in decades, there are many questions to ask about how to deal with the over-supply in the coming 12 to 18 months.
Whilst a falling Australian dollar and cheaper oil is providing a glimmer of hope for Australian coal mining, these improved conditions could help prevent the thing the sector needs.
Australian coal mining companies have been able to stand their ground and keep everyone working in a challenging global coal market – even displacing some of their major competitors in the US, Canada and Indonesia. The activity in the local coal market here in Australia is assisting to keep the market over-supplied, and the coal price down.
Coal mining company Yancoal complaining of restraints
Australian coal mining company Yancoal has been complaining about the restraints imposed by take-or-pay contracts. Spokesman James Rickards said a small improvement in market conditions and minor price increases in the first few months of the year, doesn’t mean coal producers can break out the champagne.
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