Duncan said the recently reinstated capacity balancing system by Port Waratah Coal Services (PWCS) has limited the amount of coal Austar can send to the port of Newcastle, forcing it to scale back weekend production.

“With the existing infrastructure constraints in the coal chain system down at the ports, we have made a decision to change from a seven-day operation to a five-day operation, and we will reduce our workforce progressively from June to September,” he said.

The move will nominally be for a two-year period, at which time the coal chain infrastructure is expected to have sufficient capacity to handle Austar’s production from a seven-day operation.

“As a company we have invested $250 million to put a new high-tech longwall system into Australia that has never been used here before, which is performing very well,” Duncan said.

“All of a sudden we’re faced with these external constraints and we’ve had to cut back – so yes, it’s had a big impact on the business and that’s why we’ve had to restructure.”

The company has also investigated different options for maintaining operations at the higher level, but has been unable to find any alternatives.

“We are also considering the possibility of exporting some coal through Port Kembla, but there are many logistical hurdles to overcome to make that option a reality,” Duncan said.

Austar’s 260 workers were told of the job cuts at a meeting this morning.

“The workforce reductions will be across the board, from top management to the coalface,” Duncan said.

“The only reason we are reducing operations is the lack of export capacity in the coal chain. If the capacity was available, we would be using it.”

The mine began production in September last year, and is working towards producing 3 million tonnes per annum over its 15-year mine life using the Longwall Top Coal Caving technique.

Austar mine manager Phil McNamara told International Longwall News in January that the mine was still building up its workforce to full numbers after struggling to find enough skilled workers.

Duncan said today that it was very frustrating that a highly motivated and innovative team at Austar was being kept from achieving its objectives by limitations on vital export infrastructure.

Austar is owned by Yancoal Australia, a subsidiary of Yanzhou Coal Company, one of China’s largest and most respected coal producers.