Insight

Australia: Is it time to shut down?

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Report summary

The majority of coal mines in Australia have been able to withstand lower coal prices and avoid closure. The fixed cost nature of infrastructure charges ('The pain of take-or-pay'), is one of many factors that has made shutting down even more expensive than producing coal at negative margins. As a result, negative margin producers have an incentive to maintain or increase output, instead of opting for production cuts or mine closure. We estimate that 4 million tonnes of Australian coal...

What's included

This report contains

  • Document

    Australia: Is it time to shut down?

    PDF 435.41 KB

Table of contents

  • Executive summary
  • Assessing the shut-down decision
  • Mines at risk of shutting down

Tables and charts

This report includes 4 images and tables including:

Tables

  • Assumptions and Impacted Production

Images

  • The likelihood of mine closure depends on cost structure and the flexibility of the operator
  • Negative margin tonnes at risk of shutting down (Base case pricing scenario 2013)
  • Tonnes at risk grows considerably under lower coal price scenarios

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