Quote:

http://www.couriermail.com.au/business/m....
July 12, 2012

QUEENSLAND mining is hitting a wall, losing production worth $3 billion in the March quarter as coal prices go into a tailspin.

The slump, due also to weaker global demand for cement, electricity and steel, could have a savage impact on the State Government's royalty revenue and Queensland's mining-dependent economy.

The gas boom in the US is also having a major impact on prices for energy, with shale gas pushing coal to the sidelines.

The Queensland Resources Council said its production index for the March quarter was at 99 points, 11 points below the December quarter.

"This is a significant drop from the previous quarter, which showed that the industry as a whole was just shy of the December 2008 peak of 112 percentage points," QRC chief executive Michael Roche said.

The price for high-quality coking coal, used in steel production, fell by more than 17 per cent in the quarter to $216 a tonne while prices for thermal coal, used in power generation, fell by about 4 per cent to $108 a tonne.

Overall coal value of production was down 28 per cent to $7.3 billion.

Tonnages through Queensland's coal export ports decreased 11 per cent in the March quarter from 44 million tonnes to 39Mt. At the same time, tonnages from the NSW coal export ports of Newcastle and Port Kembla were down only 3 per cent to 33Mt. Tonnage from all of the world's main coal export ports was down 9 per cent.

The QRC said the value-of-production index plunged 40 per cent to 135 index points at the end of March.

"In aggregate terms, the Queensland value of production decreased from $12.8 billion in the December 2011 quarter to $9.8 billion in the March quarter," the QRC said.

While gold prices have stabilised, thermal and coking coal in terms of volume and price were the major contributors to the decrease.

Mr Roche said a report by Port Jackson Partners (PJP) also showed increasing labour, energy and transport costs, the high Australian dollar, lower commodity prices and lower commodity grades were affecting the competitiveness of projects.

The report said a significantly greater percentage of Australian/Queensland thermal and metallurgical coal mines and copper and nickel operations were now in the upper three and four quartile ranges, which "may not be attractive to global customers".....