Coal news and updates

They are not cheering about any explosive boom of recovery. But they are hoping for a gradual pick up in work to help miners improve their efficiency in digging coal from seams.

 

Coal, a large industry for Queensland, since mid-2012 has been savagely hit in the resources slowdown. Mines shut and the Queensland Resources Council estimates almost 8000 jobs have gone.

 

The global resources slowdown has also ground down earnings at mining-service operators, who do everything from testing ore samples to building conveyor belts.

 

Profit results posted last week showed the carnage: Mackay-based Mastermyne, which specialises in coal mines, revealed half-year profits went from $8 million to $772,000.

 

A couple of contracts had finished in the period, affecting the result. But management said they were confident they had “moved past the bottom of the downward cycle for (Mastermyne)”.

 

“We’ve come out of cost-cutting (cycle),” Mastermyne chief executive officer Tony Caruso said of how mining houses were acting.

 

Miners were now focusing on volume to drive efficiency and this could mean more use of Mastermyne’s services such as developing underground mine roads, he said. It marks a slight improvement on Mastermyne’s July guidance that some stability was returning.

 

Brisbane-based laboratory testing business ALS also revealed full-year profits could fall from $228 million to between $160 million and $170 million, partly blamed on the mining slowdown.

 

Yet coal work might improve. “I think we’ve seen the worst of it,” ALS CEO Greg Kilmister said of Australia’s coal industry.

 

He was cautious about any rebound, saying it would be “a slight recovery”. This guidance is more optimistic than on ALS’s outlook in July, of an improvement in coal overall possibly being 18 months away.

 

Mr Kilmister also last week said the overall minerals market was “at or near the bottom of the cycle”.

 

The downward cycle meant some service operators’s cash flows shrunk, along with staff and pay. At Ausenco, turning from a $41 million profit to a $35 million loss, top executives and directors volunteered a temporary 10 per cent chop to fixed pay.

 

Brisbane-based Ausenco also will not pay short-and-long term bonuses for 2013’s result.

 

Ausenco CEO Zimi Meka said a modest improvement to business conditions was expected in the second half. That was because work won in the first quarter was expected to flow through.

 

He cited signs of improvements, such as higher tender activity. The counterweight was increasing competition — although Mr Meka said this was not across all sectors.

 

At Brisbane-based Sedgman, which posted a $6 million half-year loss, CEO Nick Jukes said fundamental industry-supporting factors remained, such as the growth of China. Offshore markets, particularly in metals, offered “opportunities”.

 

But the pipeline of targeted work had shrunk from $6.6 billion to $4.9 billion and the industry still faced short-term challenges, he said.

 

“There is some light at the end of the tunnel. We hope it’s not a train,” he said.

 

Source: http://www.couriermail.com.au/