BHP price talks raise jobs fears

13 Sep 2012, 4:55 pm   -   Source: AAP

BHP Billiton is expected to cut its next coking coal contract in Japan by 24 per cent, sparking fresh concerns about the Qld coal industry

More job losses and coal mine closures are feared in Queensland, amid reports that BHP Billiton will cut sharply the price of its next coking coal contract in Japan.

BHP, Queensland's largest coal producer, wouldn't comment on the report from Japan on Thursday that it was in talks to cut the price of a tonne of coking coal by 24 per cent to $US170 ($A163.17).

The price to Japanese steelmakers would be the lowest since the quarterly pricing system was adopted more than two years ago and would apply from October to December this year.

It compares to a record high of about $US330 ($A316.74) a tonne in the first half of calendar 2011.

The fall in prices and high operating costs have caused more than 2000 coal mining job losses in Queensland so far this year, including this week's announced closure by BHP of the Gregory mine.

Morningstar analyst Mathew Hodge said he expected mining companies to close operations and reduce supply to try and stop the price slide.

"BHP has got pretty good, large, market share in the coking coal market so it can, to an extent, influence industry supply and therefore price," he told AAP.

"They're not just going to produce at any price."

Queensland is the largest coking coal market in the world and BHP is its biggest producer.

The weaker spot prices are due to a slowdown in steel demand in China.

When prices were high they covered up rising operating costs related to labour productivity and the cost of labour, Mr Hodge said.

BHP shares closed seven cents down at $32.78.

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