"We expect 2004 to be another challenging year," Coal & Allied managing director Gary Goldberg said.

Last year's revenues were adversely affected by several factors: lower market prices for thermal coal, the appreciation of the Australian dollar, demurrage costs that averaged around US$1 per tonne, and a rise in premiums for workers compensation insurance. Revenue in 2002 also featured the sale of several assets.

Production of saleable coal was down 2 million tonnes to 27.2Mt following a decision in June to adapt to market conditions.

Overall, net profit after tax was just $100,000 compared with $159.7 million in 2002. Bumping up this result is an expected tax benefit of $29.6 million because of tax consolidation starting from January 2003.

"This result clearly reflects the very difficult market conditions experienced in 2003," Goldberg said. "The market price formation for 2004 will be heavily influenced by the behaviour of China as a coal exporter."

The company had warned of an expected loss of roughly $30 million for 2003 in mid-December.

Coal & Allied is to merge with Rio Tinto Coal Australia (formerly Pacific Coal), which will result in a reduction of management, corporate and administrative positions in Coal & Allied. MiningNews.net