Whitehaven battling a strong dollar, weak price
The coalminer said it had cut 40 jobs at its Tarrawonga and Rocglen mines as part of the first stage of its operational review, and would continue to reduce costs at its other mines.
"Whitehaven is committed to driving down costs ... with a key focus on reducing mine operating costs, overheads and extracting operational efficiencies," it said.
Investors were looking for signs of improvement at its Narrabri operations and news of final approval at its controversial Maules Creek mine in Tuesday's quarterly production update.
But production from Narrabri has been slow to ramp up, while approvals at Maules Creek have been delayed extensively, coming at a "significant cost" of about $US4 a tonne, Whitehaven said.
While Whitehaven said its Narrabri mine had performed well in the quarter, it had been adversely affected by persistent problems with moisture, which lowers the energy content - and sale price - of its thermal coal.
The ramp up of the Narrabri longwall project accounted for a 99 per cent increase in coal production to 2.5 million tonnes.
The Maules Creek coalmine, within the Leard State Forest in the NSW Gunnedah Basin, achieved notoriety as the subject of an elaborate hoax by an environmental activist in January that momentarily wiped $300 million off Whitehaven's market capitalisation. It also stands to double Whitehaven's annual production if it gets off the ground.
The project received conditional approval last month and is now awaiting final approval from federal and state governments.
Managing director Paul Flynn said he was confident final approvals were imminent.
Shares in Whitehaven closed 1¢, or 0.5 per cent, lower at $1.95.
Frequently Asked Questions about this Article…
Whitehaven Coal says weak coal prices and a strong Australian dollar have hurt performance, so it is cutting costs to protect margins. As part of an operational review it has cut 40 jobs at the Tarrawonga and Rocglen mines and plans further cost reductions across its operations to lower mine operating costs, overheads and improve efficiencies.
The company reported that a stronger Australian dollar and weaker coal prices are dragging on overall performance by reducing revenue and margins. These market conditions are a major reason Whitehaven is pursuing cost cuts and operational efficiencies.
Narrabri’s longwall ramp‑up helped drive a 99% increase in coal production to 2.5 million tonnes, and the mine performed well in the quarter. However, the operation has been slow to fully ramp up and has faced persistent moisture problems that lower the energy content — and therefore the sale price — of its thermal coal.
Moisture lowers the energy content of thermal coal, which directly reduces its sale price. Whitehaven said persistent moisture problems at Narrabri have adversely affected the energy content and therefore the revenue the company can get for that coal.
Maules Creek received conditional approval last month and is now awaiting final federal and state approvals. If it proceeds, the mine could potentially double Whitehaven’s annual production, so final approvals are closely watched by investors and the company’s management.
Yes. Whitehaven said the extensive delays to approvals at Maules Creek have come at a significant cost of about US$4 per tonne to the business.
An elaborate hoax by an environmental activist in January momentarily wiped about $300 million off Whitehaven’s market capitalisation. The hoax targeted the Maules Creek coalmine and drew market attention to the project’s controversies.
Following the company’s production update and commentary, Whitehaven shares closed 1 cent, or 0.5%, lower at $1.95.
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