Coal company Bathurst Resources is laying off 29 staff, holding back its new Escarpment Mine and slashing board and executive pay by up to 30 per cent as it cuts costs in the face of slumping world coal prices.
The price of coal has dropped to a nine-year low, so far that Bathurst's new Escarpment Mine would be only at break-even at start-up operating costs, so coal production will be held back till prices recover.
Bathurst is waiting for final official approval to start work on the mine on the West Coast.
The international price for coking coal has dropped from its 2012 high of more than US$300 (NZ$360) per tonne to a current spot of about US$120 per tonne, its weakest position in about nine years.
Bathurst has consistently said its expected operating costs at Escarpment would be about US$120/tonne on start-up and would fall to less than US$90 a tonne as production ramped up to about 1 million tonnes a year.
Bathurst is committed to setting up the mine as soon as authority is granted, but will "defer ramping up production until such time as the market is deemed to be recovering".
For now, the aim will be on securing the site, setting up facilities, including water management dams and stockpile areas, and mining enough coal to complete market qualification for coking coal supply to steel producers, mainly in Japan and India.
"Sadly this means that about 29 jobs will become redundant, but it will ensure that the company preserves cash to continue its operating and development activity," Bathurst said.
After the retirement of Craig Munro as chairman and his succession by Dave Frow, the board has elected not to replace the position and run with a smaller board. The board and executive also all agreed an immediate reduction in pay of up to 30 per cent.
- Fairfax Media