EDITORIAL: Hunter to share in coal pain

WHILE mining industry commentators argue about whether the boom has ended or is just having a rest, the big mining companies have embarked on cost-cutting campaigns to maintain, as far as possible, their profit levels.

Across the coal industry some less profitable mines have been closed and now Rio Tinto has flagged a push to oblige its contractors and suppliers to ‘‘share the burden’’ of prices that have fallen from the stratospheric highs of a few years ago.

Prices are still respectable by historical standards, but costs have risen in proportion.

Two decades ago, for example, Hunter steaming coal was selling for about $30 a tonne and coalminers were earning about $85,000 a year. Now the price is about $87 a tonne and coalminers are said to earn about $170,000.

In June, 1993, a newspaper report commented that Australian coalmines were ‘‘generally earning inadequate returns because of low export prices, high costs and excess supply’’.

While the definition of ‘‘inadequate’’ is obviously both flexible and debatable, some mining company executives are again making similar remarks.

Australia, they say, is losing its edge as a competitive producer, and will have to take firm steps to recover ground lost to cheaper overseas operations.

Cutting costs is the obvious first step, and labour costs must inevitably receive attention from the corporate accountants.

That was true 20 years ago, just as it had been true on all those occasions in the past when booms ended in over-investment, oversupply and reduced profitability.

There are factors that may set the 21st century apart, however.

In 1993, for example, there were very few non-union coalminers in the Hunter Valley. In 2013 some assert that non-union miners may make up 30per cent of the total – or more. Contract miners are said to earn between $10,000 and $20,000 more than their colleagues on awards, albeit perhaps without some award conditions.

It will be interesting and instructive to observe any possible effects of the cost-cutting drive on the different categories of worker.

So far much of the impact appears to have been borne by organisations involved in supplying services and equipment to mines, with many layoffs already reported across the Hunter.

Now the knife seems poised to slice still closer to the bone.

Many Hunter households will be hoping 2013 brings renewed life to the flagging boom, before too many more jobs are shed.


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