The poor earnings figures will put pressure on the company’s management to resist calls from unions to add clauses to enterprise agreements with its Dendrobium, Appin and West Cliff mines in New South Wales that reduce the creeping levels of casualization and contracted labour.
The industrial tension at Dendrobium mine escalated last week with 200 workers electing to hold a seven day strike over the casualisation of labour at the mine. They are continuing with industrial action but have returned this week as negotiations continue.
The dispute is seen as a beachhead by the Construction Forestry Mining and Energy Union against the growing trend to replace fulltime workers with casual or contractor labour in the coal mining industry.
The workers want clauses inserted in their updated enterprise agreement that limits the creeping number of casual workers at the mine.
Appin and White Cliff will also have to negotiate their enterprise agreements where this issue will figure prominently.
Illawarra Coal’s operating unit costs declined by 24% in FY15 to US$74/t in 2015, the company said.
“This significant reduction in costs was driven by a favourable movement in foreign exchange rate markets and broader cost savings initiatives,” it said. “For example, a significant reduction in contractor rates has been achieved and is reflected in our forward plans.
“The continual improvement in the planning and execution of maintenance activity, and a broader increase in labour productivity is expected to contribute to a reduction in controllable operating costs in FY16.”
Illawarra Metallurgical Coal also saw its revenues plunge to $814 million for the year to $878 million previously.
The company managed to achieve $165 million of cost related efficiencies in FY2015 which covered the $164 million it lost in lower realised coal prices.
The Appin Area 9 underground extension at Illawarra Metallurgical Coal is the group’s sole major project in development.
It is expected to be commissioned ahead of schedule in the second half of FY2016, approximately 20% below the original budget of $845 million.
The total capital expenditure for FY2015 was $308 million.
