Thermal coal is languishing around $US60 a tonne, compared to about $US150 three years ago, while metallurgical coal has fallen to about $US80 a tonne, from more than $US300 in 2011.
“I think the industry has been a bit over rational, they have just assumed that the high-cost producers will exit,” Mr Dalla Valle said.
In an interview with the Financial Review, BHP Billiton (NYSE:BHP) chief commercial officer Dean Dalla Valle says that it’s hard to go broke mining coal, and that low prices will continue to be the norm as miners refuse to cut production.
In an interview with the Financial Review, BHP Billiton (NYSE:BHP) chief commercial officer Dean Dalla Valle says that it’s hard to go broke mining coal, and that low prices will continue to be the norm as miners refuse to cut production.
As quoted in the publication:
“But people have been driving productivity. I think customers value a diverse supply base and the supply has been sticky. Going broke is hard to do.”
He stressed the long-term fundamentals for coal were strong but “given there is ample supply, prices will be under pressure”.
Mr Dalla Valle headed up coal at BHP before switching positions with Mike Henry in January, to become head of marketing and technology. Last month, he was also made chief commercial officer, a position not seen at the miner since 2011.