Anglo American is cutting more than 10 percent of its workforce at coal mines in Australia to reduce costs by one-fifth this year, its Anglo Coal Australia unit said on Monday.

Anglo had already mothballed its underground Aquila mine in Middlemount, and its Dawson North pit lode, both in Queensland state, 49 percent owned by Mitsui Coal Holdings, as demand for steelmaking coals drops off, driving selling prices to less than half last year's level of around $300 per tonne.

A total of 650 staff and outside contractors jobs will go out of a total workforce of around 5,000, a company spokesman said.

Collieries across eastern Australia are slowing down or closing after years of strong growth as steel mills worldwide turn down production.

A 50:50 joint venture between Japanese trading house Mitsubishi Corp and BHP Billiton, the world's largest coking coal producer, is reducing output by as much as 15 percent in Australia in the first half.

Australia's Rio Tinto Group/Plc, Canada's Teck Cominco Ltd, U.S.-based Peabody Energy, London-listed Xstrata Plc and Australia's Macarthur Coal Ltd have also announced reductions in coking coal output. (Reporting by James Regan)

© Thomson Reuters 2009 All rights reserved