As part of its half-year results, WDS said mobilisation for the drift project started in February and by September it had started the commissioning phase of the conveyor system and a 4-5 month ramp up period of the major mining equipment to reach full production levels.
“However by the end of the first month a number of technical problems had been encountered and production rates were well below those needed to be sustained throughout the balance of the contract period,” WDS told the market.
“As reported in detail to the market, assessments were made in early October and again in November on the projected rate of progress and the impact of WDS’ performance against the contract schedule.
“In addition to costs already incurred, this resulted in further provisions being made in the half to cover the future risk of further time and cost over runs on that project to completion in mid-2016.”
Laurence Voyer, the former Leighton veteran who was appointed WDS’ managing director and CEO in November, said progress was being made at Eagle Downs.
“We are making good headway on getting Eagle Downs’ production rates up to contract levels and this will remain our primary focus for the remainder of full year 2015,” he said.
“We expect to double our production driveage over the next three months, achieving the same number of metres in that time as we have since production commenced.”
However, an industry source told ICN before Christmas that the Eagle Downs project’s construction manager, project controls manager, exploration geologist, human resources manager and procurement manager had all been retrenched since performance issues became known.
The source also said the project general manager had earlier left for personal reasons (around October) while the Eagle Downs project was undergoing “complete pull-apart optimisation of the definitive feasibility study” to save potentially hundreds of millions in development costs.
ICN has received no response to these claims from Eagle Downs owners Vale or Aquila (which was acquired by Baosteel in July) while it is seeking comment on them from WDS.
The source also said that there was a decline in morale for Eagle Downs coal management and contractors at the time.
The Eagle Downs hard coking coal project is targeting completion by the first half of 2017.
The project aims to produce 4.5 million tonnes per annum of coking coal over the first 10 years of its 47-year mine life and has potential to expand to 8Mtpa through longwall top coal caving technology.
WDS results
WDS’ recent half year results were also impacted by early demobilisation from the Australia Pacific LNG project due to a WDS fatality, and the subsequent failure of the energy business to secure previously forecast work.
The resource industry contractor had a post-tax loss of $14.9 million for the period
WDS has reported a loss after tax of $14.9 million for the half-year ended December 31.
The energy division recorded a 50.4% decline in revenue to $71.5 million, translating to a loss of $6.2 million.
The mining division managed an increase of 36.5% to $42.2 million; however, a $5.4 million goodwill impairment imposed on the division helped ring in a loss of $9.2 million.
The company said its order book remained strong at $229.9 million balanced over energy and mining, and that this would result in a FY2015 second half profit of $2-4 million – though the full FY2015 result was projected as a loss of $11-13 million.
