Chinese coal firm cuts 100k jobs as market crash creates fossil “Lehman Bros”

Intro

Things have gone from dire to catastrophic for the global coal industry this week, with a global commodities market rout and the largest worker layoff in China’s history, once again demonstrating that coal’s destructive legacy remains a clear and present danger to people and planet. Struggling with the commodity price collapse even before Goldman Sachs declared peak coal and reset its long-term forecast from US$65/tonne to $50/tonne, China’s Longmay Group has announced (Mandarin) it will cut 100,000 jobs – 40 per cent of its entire 240,000-strong labor force. However, struggle is not limited to China. Terminal decline is writ large over the broader industry. A number of US coal producers have declared bankruptcy, others are teetering, and global giants such as BHP Billiton and Glencore are putting on brave faces as they stare into a worsening commodities crash. Glencore has already been dubbed the sector’s “Lehman Brothers” after losing a third of its value overnight, and while its stocks have recovered somewhat, the move away from fossil fuels by public and private sectors does not bode well for its future. It will be workers that suffer if governments do not do more to ensure a just transition.

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  • “Peak coal is coming sooner than expected. The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues. In addition to regulatory headwinds that undermine in some markets the economics of coal-fired power generation in favor of cleaner fuels, the demand outlook is also challenged by additional risks.” – Investment banking group Goldman Sachs
  • “[The commodities market crash has] stoked fears about: a) China; b) around the future of commodities; and, c) what does that mean about the future of those who do have a high level of debt on their balance sheet going forward into the uncertain future.” – IG market strategist Evan Lucas
  • “As coal companies go bankrupt or leave Australia, it is coal workers who are hit the hardest, followed by state governments, who are regularly left to foot the bill for cleaning up the mine.China, Japan and India are all diversifying their energy sectors away from imported coal, with coal imports from China down 31 per cent already this year. This scenario creates two major public policy challenges: how to transition thousands of jobs in the sector; and how to pay for billions in clean-up and rehabilitation costs for dozens of disused coal mines.” – Australian Greens leader Dr Richard Di Natale
  • “BHP Billiton needs to be fundamentally changing its business model to leave fossil fuels in the ground. No amount of spin can hide the fact that the company is one of the world’s largest producers of coal, and that its corporate irresponsibility is cooking the climate.” – Friends of the Earth Climate campaigner Guy Shrubsole

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