Total coal production from the company’s portfolio of mines came to 8.7 million tonnes for the first six months of 2009, down 8% from the corresponding period last year.

Coal & Allied said production was adversely affected by weather interruptions, an increased strip ratio at its Mount Thorley Warkworth open cut operations in the Hunter Valley, and the commissioning of a new coal handling facility at its 40%-owned Bengalla mine.

Sales revenue for the first half was $1.25 billion, 31% higher year-on-year, with Coal & Allied crediting the gains to a weaker Australian dollar during the period.

Aside from increased expenses in strip ratio and waste removal at the Mount Thorley Warkworth operations, Coal & Allied said explosives costs were higher and maintenance-related activity had also increased.

Selling and delivery costs were higher in the first half of this year by $19 million, including a $31 million jump in royalty payments to the New South Wales government.

While noting that benchmark prices for thermal coal and semi-soft coking coal are down 42% and 68% for the current Japanese financial year, Coal & Allied expects revenue of $10-30 million from above-benchmark carryover tonnages in the latter half of this year.

Commenting on the business environment in its half-yearly report, Coal & Allied said the global financial crisis had severely affected the economies of Japan and South Korea, which collectively bought more than 50% of its coal.

As a 36.5% stakeholder of Port Waratah Coal Services, Coal & Allied said the port operator was on schedule with the $458 million expansion of its Newcastle coal terminal to reach 113Mt per annum capacity, set for completion in the September quarter.

Coal & Allied said it had net cash of $362 million at the end of June.

The company also declared an interim ordinary dividend of $1.60 per share fully franked, in line with the same period last year.

Coal & Allied is 76% owned by Rio Tinto.

Shares in Coal & Allied closed up 50c to $93 yesterday.