Bristow said that with coking coal exports priced in dollars, Australian and Canadian producers were now very competitive against the US suppliers. "Australia is very competitive at the $0.65 exchange rate," he said in a paper presented at the Australian Bureau of Agricultural and Resource Economics (ABARE) Outlook '99 conference. The price cuts reflect lower production from recessed Japanese steel mills. BHP operates the Bowen Basin mines in Queensland which ship from Hay Point.

Major competitors of established Australian suppliers were now newer Australian mines with very low start up costs and innovative operatingpractices, Bristwo said. "The $9 price cut might be just what the doctor ordered if it can bring about the changes in the industry that have been too long delayed."

"An industry shakeout must happen. Over the next year the flow-on effects of the $9 reduction and exchange rate implications will see a number of the more unproductive high cost mines close or restructure, unable to compete in an industry where the cost curve has taken a sudden steep decrease," he said.