$600 million Australian coal mine sold for $1 to restart production

An Australian colliery mothballed in 2014 will restart production next year despite moves by global giants to restrict output as the commodities downturn bites, Xinhua news agency quoted the operator as saying.

Brazilian mining giant Vale and Japanese Firm Sumitomo halted operations of the 1.1 million tonne Isaac Plains coking coal operation in central Queensland state in September 2014.

Junior Australian miner Stanmore Coal bought control for one Australian dollar (72 U.S. cents) the following July, taking on all existing contractual obligations.

Stanmore announced the mine would re-open, expecting shipments of coking coal to commence in April 2016, creating 7 million Australian dollars in royalties to the cash strapped Queensland state government, as well as other federal and state taxes.

“Challenging commodity markets have presented an exceptional opportunity for Stanmore and in early 2016 we will become an independent producer of high quality coking coal for export to the steel industry in the region,” Stanmore Coal managing director Nick Jorss said in a statement.

Stanmore is at odds with Australia’s dwindling coal sector as the industry contracts from mine closures – some adjacent to Isaac Plains – forcing 4,000 job losses over the past two years alone from falling key industrial commodities as the global supply glut continues, Xinhua said.

Prices for coking coal, used in steal making, have slumped from 300 U.S. dollars per tonne in 2011 to around 80 U.S dollars per tonne, reflecting the downfall of iron ore as China’s steal sector, a key destination for Australian commodities, begins to slow output.

“The acquisition of Isaac Plains for a nominal sum gives us a fully equipped coking coal mine with three years of mine life at current prices,” Stanmore Coal chairman Neville Sneddon said.

The miner’s much larger rival, Swiss-based coal giant Glencore, announced earlier in December it was placing its Collinsville thermal coal mine – which has slumped along with coking coal – in idle mode and restricting production.

Glencore’s move preceded global giant Anglo American’s divestment out of Australia’s coal industry amid its global restructure, merging six businesses into three with plans to cut its workforce by two-thirds.

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