QRC CEO Michael Roche said a survey of members showed reduced costs and significant productivity gains had put the majority of companies in the lowest two quartiles of the global cost curve in 2014, a significant turnaround from 12 months ago when most were in the top two quartiles.

In 2013, half were operating in the highest two quartiles, but after rigorous cost-cutting and significant productivity gains (through improved equipment utilisation and higher volumes), more than 80% of operations are now in quartiles one or two.

“The industry has done the heavy lifting when it comes to staying competitive,” Roche said.

“We now encourage governments and infrastructure providers to do their bit when it comes to taxes, royalties, freight tariffs and regulation.”

According to the survey results, in 2014 30% of those high-cost, at-risk operations have successfully reduced costs to fall back into quartiles one or two. The survey found that 70% of operations report they are in the bottom two quartiles, noting 84% were there in 2008.

QRC can also distinguish cost curve quartile comparisons by category: mining, minerals processing, oil and gas and contractors.

However, given very low coal prices, operations in quartiles three and four (and possibly quartile two) would not be recovering their cash costs and thereby operating at a loss.

Given that coal producers commit to take-or-pay contracts for rail, port, water and power (meaning they pay for the contracted capacity regardless of usage), losses would typically need to be greater than the take-or-pay cost commitments before a mine opted to shut the operation down and incur the full take-or-pay liability and all other associated costs.

“The QRC estimates that a significant percentage of Queensland coal operations are operating at a loss, but anticipated losses do not yet exceed full take-or-pay cost liabilities and other expected shut down costs,” QRC said.

“This situation may change if the Australian dollar continues to appreciate and if coal prices continue to fall.

“The implications of this are significant in the short and longer term. Mining shutdowns will lead to large direct job losses, even greater flow-on job losses in service providers and a significant decrease in government revenues.

“Longer term, companies making sustained losses or anaemic returns will not earn the needed capital to replenish depleted reserves and/or invest in future projects.”