The company said some of its customers had postponed their December shipments, and with delays at Abbot Point and Dalrymple Bay Coal Terminal also impacting its shipments, the company now expects to export only 3.9 million tonnes in 2009, down from 5Mt.
As a result, the company said it would cut production from Moorvale and Coppabella to “ensure coal stockpiles are manageable”
A spokesperson from Macarthur said it would reduce production at Moorvale by around 50% meaning production at both mines would be cut by around 20-25%. Coppabella will continue to operate at a higher capacity.
Around 80 staff would be cut from Coppabella while 85 would be going from Moorvale, reducing staffing levels by 30%, the spokesperson added.
Sydney-based Macarthur also expects its earnings to come in under previous expectations, with profits for the six months to December this year likely to be in the range of $75 million to $125 million – down from previous guidance of $150 million to $160 million.
Macarthur said it could not provide a clearer profit guidance due to its currency hedging and accounting practices – but the company could face a $48 million impairment from its currency hedging which would knock its profits down to the lower edge of its guidance.
It will also defer uncommitted capital expenditure and exploration spending as well.
Macarthur chairman Keith De Lacy said the company was still in good shape but needed to manage its costs carefully.
“These are unprecedented times and these proactive measures are being taken in order to preserve shareholder value and provide the company with flexibility to respond as soon as market conditions improve,” he said.
Macarthur said given these factors it had also decided not to declare a dividend.
Macarthur owns 73.3% of the Coppabella and Moorvale mines and the company says it accounts for some 35% of the seaborne global demand for PCI coal. As late as last month the company said it believed PCI coal was a low-volatility and high-growth coal market.
Today the miner admitted future coal demand was uncertain.
“We are confident there will be a recovery in coal demand although we cannot predict when that is likely to happen,” De Lacy added.
Macarthur’s announcement is yet another sign that coal markets are slowing after spot prices dropped from record highs achieved earlier this year, while analysts are also predicting contract prices to decline significantly for metallurgical coal used in steelmaking.
Analysts believe coking coal prices may decline to somewhere around $US200 per tonne in the next contract year (starting April 1) down from around $300/t this year.
There have also been rumours that Japanese steelmakers have already requested Australian coal miners, including BHP Billiton, defer shipments.
Shares in Macarthur were punished by the Australian market on the news, falling by A64c or 19% to $2.83.
