Peabody cuts jobs and activity at North Goonyella

Peabody Energy is slashing labour and activity at the North Goonyella mine in Queensland as it continues to re-ventilate zone B.

The Middlemount mine in the Isaac region of Queensland was hit by an underground fire during a longwall move in September 2018, which led to the site’s closure.

Peabody president and chief executive officer Glenn Kellow said the company was looking for other options for workers where possible.

“Given the expected length of time to ventilate zone B, we are significantly lowering labour requirements and planned holding costs,” Kellow said.

“We reduced most of the remaining salaried and hourly workforce and are looking to offer potential employment opportunities to fill vacancies at other Peabody mines where practical.”

The company has also reduced its quarterly run-rate estimates for 2020 to half of that of recent levels.

To successfully ventilate zone B, Peabody expects to incur additional costs of between $12 and $15 million over a multi-month period.

Peabody has forfeited its attempts to access North Goonyella’s 10 north panel and has identified a preferred path to mine the southern middle seam reserves, starting with the six-south panel.

The southern panels include approximately 20 million tonnes of high-quality hard coking coal.

“Assuming the successful ventilation or re-entry of zone B, we estimate 2020 project costs are approximately $50 million to $75 million, beginning in the second half of the year with development of 6 south,” Kellow said.

“A panel this length should require about 18 to 24 months to develop and then we would be in a position to begin longwall production.

“We will then continue to refine capital and cost estimates as work progresses through zone B.”

Peabody is considering “a host of options” for Goonyella, including mining the southern panels from the surface to access multiple seams.

“We would also look to mitigate cash outlays by selling development tonnes into the market,” Kellow said.

To date, Peabody has stabilised, ventilated and re-entered zone A and preserved opportunities to access its reserves while ensuring safety for all workers on-site.

“All steps we’ve taken have not only been necessary, but beneficial to preserve access to an additional 65 million tonnes of hard coking coal in the lower seam,” Kellow said.

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