5 Sep 2012

Fall in coal prices blamed on drop in China

10:25 am on 5 September 2012

An energy consultant says a sudden fall in China's building boom is behind falling coal prices and prices may take longer than the usual 10 year cycle to recover.

Murray Ellis told Morning Report that coal is currently in a super cycle, which means the dip will be longer than the standard 10 year commodity cycle.

Solid Energy on Friday announced a suspension of operations at the Spring Creek mine on the West Coast while it reviews the mine's future.

Chief executive Don Elder said keeping Spring Creek open does not make economic sense.

West Coast-Tasman MP Damien O'Connor told Morning Report on Wednesday that the miners know changes have to be made to drive down the cost of production, but that did not mean the mine has to be shut down.

Mr Ellis said the cost of transporting coal from the coast to Port lyttelton for export, was also a considerable factor.