For the six months ended June 2005, coal contributed $US642.5 million, or 47%, of group EBITDA (earnings before interest, taxation, depreciation and amortisation), which increased by 50% to $US1.358 billion.
Australian thermal operations produced 18 million tonnes in the first half, up 2%, while coking coal production at 2.4Mt was slightly down from the previous year. South African mines produced 9.2Mt, an increase of 6%.
Capital expenditure for Australian operations totalled $US179 million, with the majority of that spent in Queensland; expenditure over the next six months is expected to be higher. Work includes an upgrade of the fines circuit at the Bulga coal handling and preparation plant and replacement of the existing Newlands coal handling and preparation plant with a new dense medium cyclone plant.
Major growth for the company’s thermal coal business is well underway, including the Greenfield Rolleston opencut operation in Queensland, with first coal expected towards year’s end. Phase one, which comprises annual production of 6Mt export and 2Mt domestic coal, will be complete in 2008.
Brownfield growth of around five million tonnes per annum has been earmarked in Australia, including the Bulga opencut and Ulan longwall expansions, both planed for 2006, and the Liddell expansion planned for 2007. Xstrata’s South African operations will increase annual production by more than 2Mtpa.
These brownfield projects are particularly attractive as they typically have rates of return of 25% and payback periods under three years.
New projects include the 2.5Mtpa Glendell opencut in New South Wales, scheduled to start in 2007; Ravensworth West opencut, a new 1.4Mtpa domestic market mine, scheduled to start in 2006.
The company also signalled the possibility of introducing a second 4Mtpa longwall at the Ulan West operation in NSW, as well a 2Mtpa opencut operation at Togara North, once port constraints ease.
Coking coal output will increase by 12% or 600,000t this year, as a result of optimising mine plans. Other increases will be generated by a second longwall at Oaky Creek No. 1 in Queensland, at a cost of $US25 million, and the new Wollombi opencut operation, located between the Newlands and Collinsville operations. Both these projects will start in 2006 and will increase annual coking coal production by 1.2Mtpa and 1.5Mtpa respectively.
In addition a trial longwall is being planned for the company’s bord and pillar Cook Colliery in Queensland, to produce around 1.3Mtpa of hard coking coal.
