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Thursday, October 15, 2020 - 12:43:22 PM
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Mining News Pro - Whitehaven Coal has paused three key development projects, including the Narrabri and Vickery extension projects in New South Wales and the Winchester South metallurgical coal project in Queensland.
As stated in Whitehaven’s September quarterly report, the subdued coal markets have forced the company to be cautious in allocating its capital to expansion.
Whitehaven doesn’t expect to make a final investment decision on these projects, on which the company’s production will be underpinned for the next 10 years.
Whitehaven’s metallurgical coal sales took a hit over the September quarter as a result of COVID-related term contract shipment deferrals, particularly in India.
This resulted in a reduction of metallurgical coal sales to 11 per cent of sales for the quarter, down 20 per cent on the previous corresponding period.
Whitehaven is optimistic about its recovery, stating that India will support metallurgical coal demand while issues surrounding Chinese coal import restrictions remain uncertain.
“During the September quarter, steel producers across Asia and India have all pleasingly resumed shipments under their term contracts,” Whitehaven stated.
“… Despite the ongoing Chinese coal import uncertainties, coal demand from India is strong and hot metal production in the country is higher year on year …”
Whitehaven delivered improved coal sales during the September quarter, totalling six million tonnes of coal from its managed operations to reflect a 13 per cent increase on prior corresponding period.
Run-of-mine production also shot by four per cent on the prior corresponding period to 4.5 million tonnes.
“Operationally, we have continued the June quarter’s momentum by delivering on-plan mining performance of coal and overburden across all operations, laying a solid foundation to much improved operational results,” Whitehaven managing director Paul Flynn said.
This was achieved at realised prices of $US52 ($73) a tonne for thermal coal and $US73 ($102) a tonne for metallurgical coal, both reflecting a decline from $US59 ($82) a tonne and $US76 ($106) a tonne from the June period, respectively.
Whitehaven stated that the globalCoal Newcastle Index (gC Newc) price averaged $US52 a tonne in the September quarter – a historically low pricing brought about by the impact of COVID-19 on Asia’s industrial activity and Chinese coal quota restrictions.
“In a more capital constrained environment, we continue to cautiously progress our development projects and implement a range of business improvement measures to drive cost reductions,” Flynn said.
Whitehaven reissued its 2021 financial year cost guidance at $69–$72 a tonne.
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