Coal news and updates

Whitehaven Coal increases coal output by 40pc

Whitehaven Coal says it dug up about 40 per cent more coal destined for buyers in Asia over the past year, after starting up its giant new mine in NSW.

Despite a prolonged downturn in coal prices, Whitehaven in August last year started producing coal at its Maules Creek mine, in which Japan’s Itochu Corporation and Electric Power Development Company, otherwise known as J-Power, have minority stakes.

The first train left the NSW site in December for Newcastle, the world’s biggest coal-export hub. Whitehaven yesterday reported record output of 14.6 million tonnes of saleable coal from the mines it manages for the 12 months through to June, up from 10.3 million tonnes in the previous year.

Coal sales were up 29 per cent to 14 million tonnes.

The Maules Creek mine produced 2.6 million tonnes of so-called run-of-mine coal — the volume of coal that is dug up before being processed — up to the end of June, after ramping up to its targeted annualised production rate of 6 million tonnes in March.

Maules Creek, which is one of the largest coal deposits in Australia and has enough reserves to operate for roughly three decades, was built amid a protracted slump in global coal prices. Preparations were already under way to expand its output to 8.5 million tonnes, Whitehaven said.

Multi-year lows in the value of coking coal, used to make steel, and thermal coal, burned to generate electricity, led miners such as BHP Billiton and Glencore to scale back their plans to expand their operations and even shut mines.

But Whitehaven said its high-quality coal from Maules Creek would still be in demand, and sold its first year’s worth of production in advance.

Coal prices have been falling since 2011 as new mines planned when commodity prices were running hot started production at a time when demand growth from major buyers such as China had slowed.

Like other coalminers, Whitehaven — which sells the majority of its coking coal to India, and its thermal coal predominantly to Japan and South Korea — has been cutting costs to help offset weaker prices.

Whitehaven has also been looking to branch out its sales into Southeast Asia.

Shares in the miner have been trading at six-year lows. The shares fell 7.5c to $1.17 yesterday. Analysts say the stock will struggle to rise as long as the outlook for coal remains weak.

source: http://www.theaustralian.com.au