Vale is to place its Integra Coal mine in Australia “into care and maintenance”, as the operation is not economically feasible under current market conditions.
“The decision is consistent with Vale’s strategy to focus on discipline in capital allocation and maximising value for its shareholders,” the Brazilian miner said on Friday May 16.
The decision was unanimously agreed by the joint venture partners of the Integra Coal mine, it added.
The open-cut mine and underground coal mine was acquired from AMCI in 2007.
Vale has a 61.1% stake in the asset, while the remaining is owned by Nippon Steel, JFE Group, Posco, Toyota Tsusho Australia and Chubu Electric Power Co.
Integra Coal produces both metallurgical and thermal coal.
Met coal production at Integra Coal increased by 73.8% year-on-year in the first quarter of 2014, to 379,000 tonnes, while thermal coal output almost doubled in the same comparison, to 48,000 tonnes, according to Vale.
The move is the latest in a widespread round of cutbacks in the coking coal industry. Seaborne coking coal prices have tumbled in the past year on oversupply and weakness in the steel market.
Metal Bulletin’s daily index for premium hard coking coal cfr Jingtang has fallen from just over $160 per tonne in early November to just under $125 per tonne in mid-May.
Earlier this month, Anglo Australian mining major Rio Tinto slashed headcount at its Hail Creek mine in a bid to cut costs. BHP Billiton Mitsubishi Alliance cut 230 jobs at its Saraji mine in February, while Anglo American cut 200 contractor jobs at its Dawson mine in November last year. All three mines are in Queensland, Australia.