The redundancy impacts will be widespread with Wollongong flagging that operators, electricians, fitters, deputies and support staff roles will be affected.
“The final reduction of our workforce will depend on mitigation measures that can be implemented,” a company spokesman said.
“The critical business needs means that any reductions arising from operational changes would need to occur as soon as practicable, subject to further consultation.”
Wollongong has called for voluntary redundancies and removed contract labour positions to help minimise impacts to direct employees. Shifts will also be cut back under the proposed changes.
Negotiations over the cuts with union officials remain underway.
“The company is committed to the long term sustainability of its Russell Vale colliery,” the spokesman said.
Wollongong blamed the continued decline in coal prices along with New South Wales government planning delays.
In May, Wollongong made 42 redundancies at Russell Vale.
At that time there was 356m of environmental approved coal left in the mine’s underway longwall panel.
This was expected to provide breathing space of several months as the mine awaited a verdict on its expansion project which is targeting an increased rate of 4.7 million tonnes per annum run of mine over a five-year mine life.
“The company continues to face significant cash flow pressures due to a delay in gaining planning approvals and, as a consequence, the company is facing a critical cash flow shortage,” the Wollongong spokesman said this week.
“To enable the company to remain viable in these difficult economic conditions it needs to make urgent changes to reduce costs.”
Wollongong has remained in a trading halt since June 1 after missing a financial reporting deadline.
Last month JP Morgan, which more recently ceased coverage of the stock, said the September quarter hard coking coal benchmark of $US93 a tonne implied a price of $51/t for Wollongong.
“Average operating costs in calendar years 2015-2017 are expected to be $A80/t free on board at NRE [Russell Vale] and $A90/t at Wongawilli,” JP Morgan said in a client note.
“The implication is that the company needs hard coking coal prices of at least $US110-$120/t to be breakeven at the EBITDA level.”
