Xstrata cutback on coal as China cools

Updated: 05:46 EST, 16 December 2008

Mining giant Xstrata has shut down half its coking coal production at a mine in Australia, a sign that the growing global storm clouds are closing in on the country.

In common with other resources companies, Xstrata has been squeezed by the slowdown in steelmakers. It follows Aussie producers such as Macarthur Coal, which has cut jobs and first-half profit forecasts after customers postponed shipments amid falling demand.

Xstrata suspended mining of the longwall at its Oaky Creek Number One project in the north-eastern state of Queensland.

Tough times ahead: Xstrata has closed part of its coal production in Australia

The mine last year produced 6.2 million tonnes of coal out of a total of 11 million tonnes at the overall complex.

Australia at first appeared to have avoided the fallout from the global crisis but the unexpectedly rapid contraction in demand in China is beginning to take its toll on the mining industry  -  the country's biggest export earner.

That has also hit iron-ore suppliers such as Rio Tinto, which last week announced a jobs cull of 14,000  -  many in Australia  -  and slashed capital expenditure by $5billion (£3.38billion) as it grapples with falling demand and plunging metals prices.