Coal miner SouthGobi to cut staff after posting US$55m net loss

SouthGobi Resources swung to a net loss of US$54.56 million in the third quarter from a net profit of US$55.92 million in the period last year, while the mining firm's revenue plunged 94.5 per cent to US$3.34 million in the quarter.

SouthGobi said it has begun sacking a third of its employees due to the uncertain state of the coal market. According to public records, the firm is estimated to have 720 full-time and part-time employees.

During the third quarter, "the company's mining activities remained fully curtailed. The company anticipates its operations will most likely remain fully curtailed in the fourth quarter", said SouthGobi, which is listed in Hong Kong, Singapore and Toronto.

The company sold 310,000 tonnes of coal at US$15.79 per tonne during the third quarter, compared to sales of 1.37 million tonnes at US$54.01 per tonne in the third quarter last year.

"China coking coal markets closest to SouthGobi's operations have continued to soften in the third quarter. The company has observed a substantial deterioration in demand sentiment among its customers, which led to a substantial decline in prices. Prices have fallen to levels below the cost of production and logistics, and need to rise to encourage production," said SouthGobi.

The company's cash and cash equivalent dwindled to US$63.5 million on September 30 from US$168.6 million at the end of last year.