MIM Holdings' half-yearly results suggest the group is finally realising some of the benefits of stringent cost cutting and restructuring over previous years.
MIM's results for the six months ended December 31 1999 were announced on January 31 2000 and heralded a long-awaited recovery for the group. The company posted earnings of $107.3 million compared with a net loss of $3.1 million for the previous corresponding period.
While its copper and lead-zinc-silver operations fared the better, the company's coal division suffered a drop in profit by almost half. Earnings before interest and tax (EBIT) for the coal business totalled $22.2 million, well down on $34.5 million previously.
MIM's earnings from the 75%-owned Oaky Creek complex reached $5 million (before abnormals) as against $10.6 million for the same period to December 31 1998 and Newlands/Collinsville/Abbot Point generated $17.2 million ($23.9 million based on the same comparison).
What must have been hard to stomach is that more coal was produced more cheaply and 38% more coal was sold, however, these gains were offset by a 23% reduction in the Aussie dollar.
The coal operations have benefited from impressive improvements in productivity and the closure of higher cost open cut mines. The Newlands operations in central Queensland, in particular, achieved an incredible run in calendar 1999, producing what is believed to be an Australian record of 5.552 million run of mine (ROM) tonnes, 5.157Mt of that longwall coal.
Meanwhile, Oaky North had been budgeted to produce about 4Mt this year but will be way short of that mark after the longwall was buried after being relocated in August last year. Retrieval operations of the longwall were ongoing with production scheduled to recommence by the end of March.
MIM's chief executive, Nick Stump, said the total cost of the recovery and relocation of the longwall at Oaky North was expected to be about $10 million, approximately 30% of which had been expended to December 31 1999.
"Despite the temporary loss of Oaky North coal output, wash plant production for the December 1999 quarter was maintained by increasing output from the Oaky No.1 and by utilising stockpiled ROM coal supplies," the company said.
"The Oaky No.1 longwall mine has moved to a continuous roster until Oaky North resumes production. This ability to change the workplace roster and maximise coal supply to the wash plant reflects the very strong support of employees at Oaky Creek."
Unfortunately for MIM, the loss of Oaky North production will be greater than $10 million, the cost of the remedial work. By the time the Oaky North longwall is going, about nine months will have been lost, which represents to about 3Mt — the annual production of most large Australian mines.
Despite the Oaky North setback, Oaky No.1 had a great year in 1999, having recorded output of 4.13Mt, including an amazing 701,000 tonnes in December, a new monthly high.
Oaky No.1's mine manager, Murray Wood, cited favorable mining conditions in both development and longwall panels, a motivated workforce and having the right people in management positions as major factors for the top performance.
"In the first half of last year we lost our entire superintendent level and a number of the coordinators under them. We were fortunate to replace all positions with some of the appointments coming from within the workforce," he said.
As part of MIM's strategy of standardisation of equipment across mine sites, Oaky No.1 will take delivery of a new Joy 12CM12 continuous miner by early March. Wood said the mine has an aging development fleet and the new equipment was purchased to suit changing conditions in the mine.
Development rates have averaged 16m per cutting shift (8.5-hour shift duration) since July 1999 but this had improved to an average in excess of 20m in the final quarter of 1999.
A longwall move is planned in March this year.
