Peabody’s Australian mines drag down results

Coal mining major Peabody Energy says its revenue results are being dragged down by weak Australian operations.

Posting a 14 per cent drop in quarterly revenue, total revenue for the three months to December fell to $1.74 billion.

The miner also revealed its Australian operational revenues dropped by 22 per cent per tonne.

Peabody’s Australian sales totalled 34.9 million tonnes, including 15.9 million tonnes of metallurgical coal and 11.4 million tonnes of seaborne thermal coal for the quarter.

The delayed commissioning of North Goonyella mine’s longwall and industrial action at its Metropolitan mine in Wollongong also cost the company $100 million.

Slicing $340 million worth of costs out of its business Peabody Energy is confident the coal sector will continue to improve.

"We look for continued record coal use in 2014 as developing nations increase coal imports and developed nations capitalise on coal's cost and reliability advantage over natural gas and renewables," Peabody chief executive Greg Boyce said.

"We see improving metallurgical coal fundamentals as 2014 progresses with demand growth that exceeds increases to supply."

But Boyce warned some Australian coal mines are still operating at a loss and are at risk of shutting in the next 12 months.

"It's our view that at today's current pricing there is still production coming out from both the US and Australia that is not sustainable," Boyce said.

"We should see those rationalisations continue to unfold during the course of 2014."

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