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55,000 coal-mining jobs at risk

Thousands of jobs in Australia’s coal mining industry are at risk, with many more indirect jobs also at stake. According to The Australian, more than 9,000 workers have already lost their jobs in Queensland and NSW coal mines.

The industry has been hit by political attacks over carbon emissions, with coal fired power stations one of the most polluting forms of energy, and now miners are also being hit by falling commodity prices.

Coal is Australia’s second-biggest export earner behind iron ore – which has also been hit by falling prices, as China moves away from an industrial economy to one driven by consumer demand, and hence requires less steel. Both iron ore and coal are key components in making steel.

Australian coal mining companies like Yancoal Australia (ASX:YAL), New Hope Corporation (ASX:NHC),  BHP Billiton (ASX:BHP) and Rio Tinto (ASX:RIO) have begun cutting costs and sacking workers, as coal revenue slides dramatically. The issue for workers is that the whole industry is being affected, so it’s not like they can go and pick up work at another coal mine somewhere else.

Regional devastation

For some regional towns, closure of the local coal mines would absolutely devastate the region, with many locals either directly or indirectly dependent on the mine for income. Rio Tinto recently warned that unless its Warkworth mine was allowed to expand to become economical, 1,300 jobs would be at risk. Despite ministerial approval for the mine, the NSW Land and Environment Court halted the expansion, citing ‘significant’ social and environmental problems if it went ahead.

With mine expansions on hold, additional coal infrastructure, including a $5 billion export terminal has been canned. Mining services and mining supplies companies are also feeling the effects, and they have been forced to cut back on their expansion plans.

The high Australian also played its part, although the coal miners will be hoping the current fall in the dollar keeps heading south.

Foolish takeaway

Coal miners are stuck between a rock and a hard place. They have little option but to cease uneconomical operations and retrench workers, or expand and utilise higher levels of automation to become economical again – which also results in workers losing jobs.

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Motley Fool writer/analyst Mike King owns shares in BHP.

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