Wesfarmers cuts coal prices

Fears that coal prices will continue falling are becoming a reality, with Wesfarmers on Tuesday confirming that it has lowered its contract sales prices yet again, according to the Sydney Morning Herald.

Wesfarmers has told the Australian Securities Exchange that coking coal from its Curragh mine in Queensland would sell for about 16% less in the June quarter than it did in the March quarter, exacerbating a price environment that already had some Australian producers running mines at a loss.

The falls had been foreshadowed by Wesfarmers boss Richard Goyder last week during the conglomerate’s quarterly results.

During those results, Goyder said “a majority” of coal producers would be financially challenged at current prices but Wesfarmers was committed to the industry and would “wait it out”.

Pension funds keen on Wiggins coal port

Queensland’s newest coal port, the $2.6 billion Wiggins Island coal export terminal, could be sold off to pension funds to take advantage of investment hunger for infrastructure assets, chairman John Massey has revealed, according to the Australian Financial Review.

“Logically in the future there’s nothing that says this is going to continue to be owned by a consortium of coal companies,” Massey said.

“They got together to get the thing built but whether they continue to have the same exposure in the long term from my point of view is debatable, because I think there are other ways of structuring this.

“You’ve got a whole lot of international investors who want Australian infrastructure. It’s likely that they’re going to want to invest in one form or another.”

WICET, which expects to start exporting coal in November, is owned by a consortium of eight coal miners, including Wesfarmers Curragh, Yancoal Resources and Bandanna Energy.

The miners formed a consortium several years ago to fund the construction of a terminal near Gladstone to increase the east coast’s export capacity by 27 million tonnes annually.

Shell edges towards Arrow LNG deals as BG mulls disposals

Royal Dutch Shell chief financial officer Simon Henry has signalled the oil major is edging toward a restructuring of its Arrow LNG venture in Queensland that may involve separate deals with some of the other three LNG projects in the state, according to the Australian Financial Review.

Henry’s comments come as BG Group, which leads one of the other Queensland LNG ventures, has pledged to take a more aggressive approach to portfolio management, which may affect its own project in Gladstone.

BG’s $US20.4 billion ($21.9 billion) Queensland Curtis venture is understood to be a leading candidate for a deal with Arrow potentially involving gas supply.

However, Shell is believed to be pursuing several options, with Santos’ Gladstone LNG venture also in the picture.