Financial haemorrhage of coal projects threatens Australian economy

One-third of Australia’s coal mining operations are operating at a loss, saying it was cheaper than copping take-or-pay bills.

One-third of Australia’s coal mining operations are operating at a loss, according to internal estimates from mining major Glencore. 

Yancoal is struggling under its take-or-pay contracts: contracts forcing the mining of extra coal? #coal #nswpol http://t.co/wx04IMvnU1
— Max Phillips (@maxphillips) April 14, 2014

Reports have circulated in the industry that many operations have been running at a loss for some time in the hope the coal price would bounce back, with a number of miners in the past saying it was cheaper to mine through the loss than cop take-or-pay bills.

.@TheyRLying2Us The Abbott Govt hitches the economy and prosperity of #Australia to fading "star" ... #coal. #auspol pic.twitter.com/XWbCd8zRNM
— Askgerbil Now (@Askgerbil) August 22, 2014

This chart, obtained by Business Insider from Glencore, combines internal data with other industry information and shows about one third of Australia’s coal mines are operating at a loss.

Each vertical line represents a mine and shows the size of its marginal loss. Across the bottom are cumulative tonnes produced in Australia.

The chart shows a good portion of operations are teetering just above or below the line and are the ones most sensitive to movements in the Aussie dollar or coal price.

There's been over-investment in #FossilFuels—with little return—& it's going to leave a whole lot of #StrandedAssets: http://t.co/RJxz2EIbyH
— Market Forces (@market_forces) July 12, 2014

The smaller portion which are making good returns, on the right hand side, Glencore said are mostly newer, open-cut operations which are easier to mine.

Australia's Ambassador for Coal, Tony Abbott, to scrap a carbon tax...

.@Liminal_ @vanbadham Real reason for Abbott scrapping carbon tax was never about saving for #families. #auspol #Coal pic.twitter.com/QJ343COk1r
— Askgerbil Now (@Askgerbil) July 12, 2014

South Korea and India introduce carbon taxes on coal imports...

S.Korean tax on coal imports for power to start from July - would include any coal imported from Bylong http://t.co/HNsRWK7DXt
— BVPA (@bylongmining) June 4, 2014

@Enerdata #India to rise tax on imported #coal for #power #plants http://t.co/8RFQf3r2Jz #energy #news
— Enerdata (@Enerdata) May 7, 2013

India increases import taxes on thermal #coal, raising Govt revenue to plug budget deficit http://t.co/0TbMPgcWMc via @BloombergNews #auspol
— Askgerbil Now (@Askgerbil) July 12, 2014

New India PM Modi announces suite of new #solar projects, partly funded by a doubling of tax on production of coal http://t.co/18ZXnsmycD
— RenewEconomy (@renew_economy) July 11, 2014