I live on the Hunter Coast in New South Wales and over the last few years of the mining boom it has been obvious that this part of Australia was really benefitting from the huge increase in demand and the price for coal. We got a big new coal terminal on Kooragang Island with another one planned. There was a huge increase in men and women wearing brightly coloured flourescent clothing and we even saw the emergence of family friendly “mummy” shifts at the coal mines in the Hunter Valley so that productivity could be kept up while the kids were at school and the other workers took their lunch break.

It has been a big boom and a lot of money has been made by the miners and the mine owners. But times both here in the Hunter Valley and in the Australian Coal industry are changing.

For over a year, maybe two, I have been hearing about the compression that the costs of production was having on mining profits because of the Australian skills shortage. I was being told of moves toward mechanisation of the mining process, new joystick trucks that line up together and can be driven remotely like a computer game by 1 person in an office and I was hearing that increasingly some of the mines up in the Valley were uneconomic.

So it is that the Financial Times overnight shon a light on the troubles in the Australian coal industry.

One of the hardest-hit parts of the mining industry in the recent downturn in commodity prices is the Australian coal industry.

That has come as a bit of a shock to some – Australia is not used to being a high-cost producer of anything.

Better get used to it. The structure of the coal market is shifting, and the current pain is a sign that Australia’s pre-eminent position in the global coal market – as the second-largest exporter of thermal coal and largest supplier of coking coal – is under threat.

“Australia shouldn’t see itself as entitled to a certain share of seaborne coal market,” says one senior mining executive. “The industry is going to have a tough time.”

Mitsubishi, Japan’s largest trading house, which in a joint venture with BHP Billiton, is the world’s top coking coal miner, recently slashed its outlook for mining earnings for the fiscal year ending in March by 80 per cent or Y150bn ($1.9bn).

the fortunes of the Australian dollar, which usually moves in line with commodity prices, have changed. Australia’s status as one of the few triple A sovereigns left standing has attracted haven flows to its currency, lifting the Aussie dollar even as mineral prices fall. This appears to be a structural rather than a cyclical shift. A stronger currency lifts costs for miners relative to their US dollar-priced revenues. In Aussie dollar terms, Newcastle thermal coal prices recently fell below their 2008-09 lows and are at their weakest in more than five years.