The falling price of coal has been blamed for Whitehaven Coal’s first-half loss of $79 million.
The miner said a focus on cost-cutting across its mining operations would continue as the company contends with a “lacklustre” coal market.
Despite posting a nine per cent increase in saleable coal production for the December quarter, Whitehaven’s earnings before interest, tax, depreciation and amortisation (EBITDA), before significant items, totalled $52.1m – a 5 per cent decline.
Revenue was down 8 per cent to $371.8 million with higher coal sales not sufficient to offset lower average prices.
Whitehaven cut its production costs by 11 per cent to average $63 a tonne, and managing director Paul Flynn said he expects costs to come down even further.
“We think we can squeeze the lemon a little further – $1-2 (a tonne) in the second six months," Flynn said.
Whitehaven expects both thermal and metallurgical coal to remain in surplus until at least 2016, but said energy demands in Asia coupled with the exit of high-cost producers would lead to a balance over the medium term.
The company said its product is fully committed to sales for the balance of FY2015.
“While not ignoring the current weakness in coal markets, we remain confident that coal has a growing role to play in the world’s future energy requirements and that the high quality coals produced by Whitehaven will be in strong demand from Whitehaven’s key Asian markets for many years into the future,” Flynn said.
A key achievement for the company has been bringing its Maules Creek mine into production three months ahead of schedule.
Maules Creek mine has produced 94,000 tonnes of coal so far, with the company working to ramp this up to 6 million tonnes by March.
Meanwhile, Whitehaven has decided to investigate extending the longwall at Narrabri mine by 400 metres instead of top coal caving.
The company said a wider longwall face compared to top coal caving would lead to lower operating risks, higher production, and reduced underground development. It said a decision on the project is likely in the current half.
Whitehaven was also able to gain approval for the Vickery mine in September, but said it is still looking for joint venture partners.
It said any development of the mine would not occur until Maules Creek mine hit its approved production level of 13Mtpa.
For now, Flynn said the company’s focus would be on optimising its key assets.
“The fundamentals of the business are continuing to improve with new low cost production established at Maules Creek and more upside potential identified at Narrabri. These two tier one assets will underpin Whitehaven for many years into the future.”