BHP Billiton Ltd. BHP +3.75% said Monday that its venture with Mitsubishi Corp. will cease production at one of its metallurgical coal mines in northeastern Australia due to falling prices and high costs.
The open-cut Gregory mine in Queensland state, which BHP said was no longer profitable in the current economic environment, is the second to be closed this year. BHP and Mitsubishi Corp. earlier shut the loss-making Norwich Park mine.
BHP said it and Mitsubishi continue to review other coal assets in their portfolio to ensure each operation can be profitable and cost-competitive throughout the commodity-price cycle.
Stephen Dumble, president of the BHP Billiton Mitsubishi Alliance, said in a statement that production costs for the Gregory mine currently exceed revenue from product sales, giving the venture no option but to cease output.
Production at Gregory will stop Oct. 10.
The mine is part of the Gregory Crinum complex. BHP said the Crinum underground mine will continue to operate alongside the Gregory coal-handling plant.
“The remaining operations will be made more competitive by the removal of the high-cost Gregory production,” Mr. Dumble said.
The BHP-Mitsubishi venture jointly operates six mines in Queensland’s Bowen Basin. The Norwich Park mine was closed in May after the venture said it was unable to find a way to restore profitability.
Marketwatch
