Glencore Xstrata PLC (GLEN.LN) Monday said it would abandon plans for a new coal shipping facility in Queensland state, a move that reflects sustained weakness in Australia 's once-booming coal export industry.

The proposed Balaclava Island Coal Export Terminal, which was designed to ship 35 million tons a year from a site 40 kilometers south of the city of Rockhampton , would have opened up a new route for coal exports from the resource-rich Bowen and Surat basins to buyers in Asia .

Xstrata's Australian coal unit spent several years examining plans for the terminal's development prior to the company's merger with Glencore International this month.

However, following completion of the merger and a review of the project, "Glencore Xstrata has decided to cease its work on the project, effective immediately," the company said in an emailed statement. It cited poor market conditions in the Australian coal industry and excess port capacity in Queensland .

The company said it also had "concerns about the industry's medium-term outlook."

Coal prices plunged to multiyear lows last year in tandem with reduced demand in countries such as Japan and China , the latter Australia 's biggest trading partner. Yancoal Australia Ltd. (YAL.AU), another major Australian producer, recently said it expected coal prices to remain under pressure "for some time."

Given subdued demand, the coal shipping industry is faced with more shipping capacity than it needs. Australian coal producers have shut pits and delayed investments, as low prices and weak Asian demand have made many of the country's mines unprofitable.

Port Waratah Coal Services, the operator of the world's largest coal-export facility at Newcastle, in the Australian state of New South Wales, has delayed plans to build a new coal terminal that would have expanded its shipping capacity by more than 80%, and may decide to scrap the project altogether, it said last month.

Διαβάστε ακόμα