Known better for coal than Coles supermarkets before 2007, Wesfarmers’ $286 million expansion of its wholly owned Curragh open cut mine will lift production to 8-8.5 million tonnes per annum from late 2011.

The mine sold 3.25Mt of metallurgical coal in the recent half. Sales volumes were down 6.8% year-on-year and thermal coal also slipped, by 24.9%, because of reduced exports.

Wesfarmers said that during the record coal prices of the 2008 second half it had moved to maximise exports.

In the recent half, aggressive cost-reduction activity slashed 8% off Curragh’s cash costs.

Over in Western Australia, the Premier mine reported a 26.9% year-on-year dive in thermal coal sales.

The fall follows unexpected demand in the 2008 second half by WA utility Verve Energy in the wake of the Varanus Island disaster, which disrupted the state’s normal power supply.

The Bengalla open cut in New South Wales’s Hunter Valley, 40% owned by Wesfarmers, improved sales volumes by 5.6% year-on-year in the last six months of 2009.

Wesfarmers’ coal division generated $624 million in revenue, a 56% fall year-on-year.

Besides lower coal prices, higher royalty costs to Stanwell Corporation in Queensland totalled $106 million and hedging losses of $65 million also adversely affected the recent result.

Wesfarmers expects lower Stanwell royalty obligations and stronger coal prices from the new Japanese financial year starting in April.

Curragh is anticipated to sell 6.3-6.8Mt of met coal for the current financial year.

Last month a cable failure on the mine’s 20.02km overland conveyor took four days to rectify, although Wesfarmers expected the force majeure event to have a minimal impact on customers due to its stockpiles at Gladstone’s port.

The diversified company ended 2009 with a cash position of $2.2 billion.

Wesfarmers shares are up 2.3% this morning to $31.33.