Coal news and updates

Bush fires singe Asciano October coal haulage; co upbeat on FY profit

RAIL and port operator Asciano said wildfires raging across New South Wales had caused extensive damage to its rail network there, weakening its ability to haul coal even as it forecast an improvement in full-year profits.

"The recent bush fires have caused extensive damage on the Western line in southern southeast Australia and will impact volumes hauled in October," Asciano said in a stock exchange filing.

Asciano hauls coal from several big mines in the Hunter Valley of New South Wales state to the Port of Newcastle, the world's largest coal export terminals, for export to Asia. Among its major clients are Glencore Xstrata International and Rio Tinto’s Coal & Allied unit.

The devastating fires that began last week, described by authorities as the worst to hit the state since the 1960s, forced the closure of Newcastle Airport and disrupted key infrastructure like rail lines and roads connecting the city with Sydney.

News of the wildfire disruption came as Asciano said it expected earnings to grow this financial year, despite challenging market conditions for some of its businesses.

The firm's Pacific National Rail business, which moves grain, mineral concentrates, iron ore and construction materials around Australia, reported lower volumes in the fiscal first-quarter through September, hurt by a slowdown in the economy--particularly in resource-rich Western Australia.

Melbourne-based Asciano said it expected peak-season container volumes through its terminals business to also be lower this year than in the previous financial year.

Australia's economy expanded by 2.6 per cent on-year in the three months through June, according to the latest official data, much slower than quarterly growth rates as high as 4 per cent last year. Policymakers have warned economic growth this year would be slower after falling commodity prices prompted mining companies to delay new investments and shutter mines.

Export grain volumes have also been falling on weaker international demand and prices, Asciano said.

"We continue to expect difficult market conditions for the remainder of fiscal 2014, with no tangible evidence yet that the recently reported improvement in consumer and business confidence has translated into a sustained pick up in volumes in either division," the company said.

Still, demand from Australia's coal sector remained robust, it said. Volumes at its coal haulage unit, Pacific National Coal, rose 17 per cent on-year in the three months through September to 38.1 million metric tonnes, as new contracts and strong volumes growth offset weak global coal prices.

The firm said its bulk and automotive port services units were also performing strongly, which, along with cost-cutting measures, should help boost earnings before interest and taxes this year. The company didn't provide specific guidance, although it said any growth would likely be at a slower rate than last year, when the company reported a 9.4 per cent earnings rise.

Source: The Australian