Record yields to continue despite closure of Dysart mine
The BHP Billiton Mitsubishi Alliance (BMA), which spearheaded the Moranbah rental freeze, has closed its Norwich Park coal mine near the town of Dysart, sending fresh fears to investors with property in the mining town.
As reported on April 3 by Smart Property Investment, BMA, in collusion with other miners, imposed a rental freeze in Moranbah in an attempt to bring the town’s overinflated property market back under control.
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The decision to close Norwich Park follows a seven week review of the mine’s viability.
“This decision was not made lightly,” BMA asset president Stephen Dumble said, “however, the impact of last year’s floods, combined with lower coal prices and high costs, has resulted in an operation that is not currently viable.”
“While recent industrial action has had an impact on production, the mine has been unprofitable for some months,” Mr Dumble said.
“As a result, we have had to take urgent steps to both stop the losses and find the best way to secure the operation’s longer term future,” he said.
“Importantly, this decision on Norwich Park Mine is not reflective of the broader quality of our world class Queensland Coal operations.”
CFMEU energy division general secretary Andrew Vickers said that even without industrial action, the mine was destined to shutdown.
“It is the lowest quality of coal that BHP mines. They get the lowest price for it in normal times, the market has been softening, the Australian dollar is high and the contracts are written in US dollars, and their pits are still full of water.”
BMA will be aiming to maximise redeployment opportunities for Norwich Park employees to Saraji Mine to enable, where possible, those employees and families to remain living in Dysart.
The mining giant’s decision to close Norwich Park comes at a time when a number industry figures are warning that the ‘boom’ is at risk.
As reported by The Australian Financial Review, miners have warned that Western Australia’s resources prowess will wane, despite evidence of record exploration investment and iron ore exports.
However, local real estate veteran from LJ Hooker Moranbah Michael Rossiter says there's still a bright future for Queensland.
“There has been a lot of industrial dispute over the last few weeks and this is just one way of people flexing their muscles,” Mr Rossiter told Smart Property Investment.
“It will have a short term impact. But I’ve been working in a mining town for 30 years, and I’ve seen all the ups and downs, but one thing I’ve learnt is that it doesn’t go down for too long.”
Mr Rossiter also defended the mining companies’ decision to freeze their rental subsidies, claiming investors brought it upon themselves.
“Some landlords were pushing the envelope way too far,” he said, “they were going from $1700 to $3000 per week.
“Even if the mines don’t subsidise the rent and landlords pull back to the original $1700 mark they are still getting a 9-12 per cent return.”
The median house price in Dysart is $480,000 and the weekly median advertised rent is $1300, According to RP Data.