REPORT: Glencore to Shut Down South Africa Coal Mine, Lay Off Workers

Swiss-based commodities trader Glencore PLC is expected to shut down some of its South African coal operations as global prices for coal continue to evaporate.

The company's coal subsidiary,Optimum Coal Mines, said in a statement it could reduce production by at least five million tons per year, which is half of the unit’s annual production rate, and lay off as many as 1,070 employees. The company has already informed South Africa’s mineral resources department and relevant unions of the potential closures.

• Rio Tinto Averts Takeover Bid From Glencore but For How Long?

• Glencore, Peabody Energy Join Forces, Agree to Merge Hunter Valley Coal Mines

Glencore said underground coal mining operations will remain open, which supplies coal to Eskom’s Hendrina Power Station, and would consider reopening the mine if commodity prices improve. “Glencore continues to review all coal operations in the prevailing economic climate,” the company said in a statement.

The past year has seen coal prices take a pounding as China’s demand for the black gold has shriveled. Earlier this week, Anglo American announced it plans to sell some of its coal assets in Australia, including South Africa, to reduce capital expenditure.  

Optimum has already begun discussions with labor unions over the planned layoffs.

This is the second time in a month that Glencore has suspended operations at coal mines. In December, it temporally shut down all of its Australian coal mines.