The announcement came days after the $895 million BHP-Mitsubishi takeover of QCT Resources was completed.

Prior to the takeover, QCT owned 100% of the South Blackwater mines which included the South Blackwater open-cut mine, the Kenmare longwall mine, and the Laleham bord and pillar mine. QCT also held 32.37% in the seven mines of the Central Queensland Coal Associates (CQCA) joint venture, along with BHP and Mitsubishi. In 1999, CQCA produced a total of 35 million tonnes of coal.

BHP said the Kenmare longwall mine will complete development of three panels in the upper seam by March 2001 with mining of these panels expected to be completed by the end of 2001. Kenmare, which has struggled with geological constraints for much of the year, will then be closed. Laleham will be closed by the end of February 2001 because of limited economic reserves and high production costs.

The combining of the South Blackwater open-cut with the CQCA Blackwater open-cut was widely anticipated as the two mines already share a common boundary and South Blackwater was already mining across the lease boundary into Blackwater. The combined operation will produce an estimated 13.5Mt of coking and thermal coal a year.

In a November Energy Economics newsletter, coal analyst Clyde Henderson identified the additional washery capacity at Blackwater as one of the major drivers behind the acquisition of QCT. South Blackwater’s spare processing capacity had become attractive for BHP with the expansion of mining operations at Blackwater.

Apart from the logic of merging Blackwater and South Blackwater operationally, “BHP was becoming irritated by the amount of management time expended on an increasingly fractious relationship with QCT”, Henderson said.

Some 205 workers will lose their jobs over a 12 month period in an integration BHP said would deliver the establishment of a more competitive mining operation.

“Most notably, they will enable the current production from the South Blackwater and Blackwater mines to be more efficiently delivered to the market and will provide customers with an enhanced and more reliable service,” BHP said.

Chief executive officer of QCT Resources, John Smith, said: “The reduction in workforce numbers is regrettable, but unavoidable considering the outlook for the underground operations. Opportunities will be available for affected employees to be selected and trained for permanent positions in the expanded open cut operations, while those leaving the operations will be assisted through this difficult period with career and personal counselling.”

Commenting on the announcement, chief executive officer of BHP Minerals, Ron McNeilly, said: “These integration plans represent an important step in achieving the consolidation that is required in Queensland to ensure that competitive, world class mining operations are established which are able to meet customer requirements well into the future.”

BHP said coal sales would be maintained at current levels to meet existing customer expectations and commitments. This will be achieved by continuing operation of South Blackwater open cut and increasing production from Blackwater.