“Over 50% of seaborne thermal coal producers are currently losing cash on a delivered basis to China,” Whitehaven said in a presentation at the UBS Iron Ore and Coal Conference in Sydney this week.
“With the thermal coal price so deep into the cost curve production cuts are likely to occur in the months ahead.”
Whitehaven said the first coal from its Maules Creek open cut project was mined this month and has flagged that initial operating costs at this new mine could be around $US62 a tonne due to “limited washing”.
This compares to spot Newcastle thermal coal prices of around $72/t this week, although it should be noted that Maules Creek will additionally produce higher-priced, semi-soft coking coal.
Whiethaven also said its group-wide costs for this financial year were expected to average about $62/t with strong production from the North Narrabri mine combined with sales of coal accumulated at the end of the September quarter leading to a fall in total costs.
In October Whitehaven revealed a new strategy to abandon the planned introduction of production-boosting longwall top coal caving technology at its Narrabri North mine in favour of widening the longwall face by 35%.
No additional planning department consent has been sought yet but widening longwall panels to 400m from existing widths of 295.6m is a 35.3% gain that will need considerably more powered roof supports to achieve.
In its update this week, Whitehaven said this path would increase annual productivity, have a similar capital expenditure to LTCC but was also a lower risk option with lower costs and less road development required.
“Wider panels if approved could be introduced from panel LW07 and lead to increased production of about 0.8 million tonnes per annum from the mine,” Whitehaven said.
The Gunnedah Basin miner also said a formal decision on wider panels would be made in the next two months.
Whitehaven noted that its credit quality perceptions were improving as Maules Creek construction advances and the Narrabri longwall ramps up production
“Refinancing is not time critical as the current facility has two years remaining, although it is Whitehaven’s intention to complete the first step in the refinancing as early as possible 2015,” the miner said on the funding front.
The $767 million Maules Creek project is considered more than 70% complete and is more than two months ahead of schedule with first coal exports expected to be railed in January instead of March.
The open cut project is targeting a rate of 6 million tonnes per annum of coal production over the first 12 months and has approval to ramp up to 13Mtpa run of mine.
Whitehaven has forecast the Narrabri mine to exceed its earlier annual guidance of 6.5 million tonnes run of mine for this financial year.
