The Oaky Creek open cut, operated by Thiess, has a high cost structure principally because of strip ratios which are now in excess of 20 billion cubic metres per tonne.

“We are restructuring the profile of our coking coal production to minimise costs and optimise the product specification we offer to customers,” chief executive Peter Coates said.

As part of this move, production from the Oaky open cut will be replaced by increased production of Xstrata’s lower cost, prime hard coking coal product from the Newlands Wollombi deposit.

“Overall production of coking coal will continue to grow in 2007, as we position our business to respond to market conditions, while lowering the cost structure of our Queensland coking operations,” Coates said.

No full-time Xstrata employees will be affected by this decision, the company said.

Meanwhile, the Australian Financial Review reported today that Xstrata Coal has confirmed it is reviewing three of its New South Wales mines for a possible sale so it can concentrate on bigger operations in the Hunter Valley.

West Wallsend, Westside and Baal Bone mines are reportedly under consideration, and could be valued at up to $400 million.