Global miner Xstrata is merging its New South Wales and Queensland divisions under a single entity, Xstrata Coal Australia.

The company made the announcement on Wednesday that it would consolidate its coal operations as the industry suffers from tough economic conditions.

A Xstrasta spokesman told ABC that the move was made due to increasing operation costs, a strong Australian dollar, increase in royalties and low coal prices.

The proposed restructuring will see the closure of Xstrata’s coal division head office in Brisbane and the axing of 100 jobs, adding to the 600 jobs that were slashed by the company in 2012.

The company has insists that these decisions will not affect its mining production but industry insiders are speculating that Xstrata’s proposal to construct a major open-cut coal mine is in doubt, reports ABC.

Xstrata is the latest mining firm to announce cost-reduction plan, following Rio Tinto’s decision to lay off 100 jobs from its coal division.

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By GlobalData

Earlier this month, Xstrata reported a 37% reduction in profits to $3.6bn for the financial year ending 31 December 2012.

Attributable profits excluding exceptional items fell 79% to $1.2bn after the company recorded $2.6bn in writedowns on its stake in the South Aftican platinum producer Lonmin and nickel and zinc assets.

Image: The Australian coal industry is facing tough economic conditions due to lower coal prices, high operational costs and strong dollar. Photo: John Nyberg.

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