<a href=Peabody Energy” height=”198″ src=”https://www.mining-technology.com/wp-content/uploads/image-digitalinsightresearch/Archive/Mining%20companies/X-20140806121205765.jpg” style=”padding: 10px” width=”300″ />

Peabody Energy is cutting down coal production by 1.5 million tonnes (Mt) a year at its Burton mine in Queensland, Australia.

The company said in a statement: "The Burton Mine is Peabody’s highest unit-cost operation, and production levels are not sustainable in the current market environment."

Production will be reduced from 2.5Mt to around 1Mt a year after negotiating with contractor, Thiess. The company has reduced its Australian coal sales target for this year by 1Mt to around 16Mt.

A Peabody Energy spokesperson told Australian Mining: "This is definitely not care and maintenance, as we will still be removing around 1Mt of coal a year."

The reduced production is likely to affect around 300 to 350 employees working at the mine.

"This is definitely not care and maintenance, as we will still be removing around 1Mt of coal a year."

Thiess said in a statement: "Peabody has requested that we review the current operations and mine plan, and work together to make operational changes, targeting lower cost coal reserves.

"Thiess is deeply mindful of the impact that these changes will have on our people and their families, and will keep them informed on the range of options available as we move forward."

Peabody reduced its annual average Australian cost estimate to a low $70 a tonne range and expects to raise its adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) from $150m to $200m.

"The initiative is one of a number of positive actions in Australia as Peabody continues to target lower costs, which include increased productivity at the Metropolitan mine following installation of a new longwall, improved performance at New South Wales thermal coal mines, on-going owner-operator conversions, and sustained cost and productivity improvement programmes across the platform," Peabody added.

Image: The Burton mine in Queensland will cut down production levels from 2.5Mt to around 1Mt a year. Photo: courtesy of Peabody Energy, Inc.