An aerial view of Paget.
An aerial view of Paget.

‘It’s quiet’: Falling coal prices hit Mackay businesses

MACKAY businesses involved in the mining sector are starting to feel the pain of falling coal prices.

The Daily Mercury understands some Paget workshops are empty, others have been forced to cut staff hours and some have no mining overhaul work currently lined up.

It comes after Dawson MP George Christensen warned last month that the resources sector would experience a delayed hit from the COVID-19 crisis as early as July.

Core Contracting Services managing director Troy Brown said with some mining projects on hold, many businesses were starting to feel the pinch.

"People are putting their hands in their pockets a lot more than they usually would," he said.

"We're certainly not in any trouble, but it is a quiet period."

Mr Brown said the unprecedented nature of the COVID-19 crisis had created a period of uncertainty for Paget businesses.

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"Everybody is waiting to see what the outcome of this is going to be," he said.

"I don't think we have seen the worst of it yet.

"Whether it is as bad as five years ago (during the mining downturn) - it probably is.

"We have seen downturns before and we will see them again, but it is about how you react as a business."

Mr Brown said Core was in a favourable position because it had already diversified into other areas, such as its new patented welding technology.

"While the workshop is quiet, we have got other businesses that are doing well," he said.

Resource Industry Network acting managing director Mark Walter said some businesses had been affected more than others.

Resource Industry Network acting managing director Mark Walter.
Resource Industry Network acting managing director Mark Walter.

"I have spoken to a number of our members, some are very busy and have quite a good schedule of work in front of them and some are certainly starting to feel the effects of the falling coal price and COVID-19," he said.

Mr Walter urged businesses to consider diversification, if they had not already.

"We know the industry will bounce back and we will be strong again, unfortunately, we just don't know what that timing looks like," he said.

"I encourage businesses that are affected to do whatever they can to lower their overheads to ride out this time, so that as coal prices and work returns, they are in the best position to take advantage of that uplift."

Economist Colin Dwyer said Mackay was one of the best performing regions in Australia in terms of employment because of its connection to the mining and agriculture industries.

Economist Colin Dwyer, of DS Economics.
Economist Colin Dwyer, of DS Economics.

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"I would expect that Mackay would recover quicker than many other areas," Mr Dwyer said.

He said it usually took three to four years for the economy to recover from global financial events similar to what is being experienced.

"Different regions will recover at different rates," he said.

In May, it was reported 200 contract jobs had been slashed across several Central Queensland mine sites amid a collapse in thermal and coking coal prices.

JP Morgan analyst Lyndon Fagan estimated demand for seaborne thermal coal would drop by six per cent, or about 60 million tonnes this year due to the economic fallout of the pandemic.