Rain disrupts the coal chain yet again, but Macarthur Coal (MCC) is confident of its future as long as infrastructure keeps up
By Anna Game-Lopata | April 12, 2011
In a presentation to a coal and iron conference sponsored by Deutsche Bank today, junior Queensland miner Macarthur coal talked up its prospects
despite unseasonal rainfall in March and uncertain coal terminal capacity.
MCC says its 2011 financial year sales target of 4.3 Mt of coal has been maintained and believes 5 Mt could be achieved at its Coppabella and Moorvale joint venture projects (CMJV) subject to improved conditions.
The miner says it has enjoyed record price settlements for both Low Volatile Pulverised Coal Injection (LV PCI) product and Hard Coking Coal (HCC) reflecting the supply side pressure caused by this quarter’s wet weather.
This has been balanced out by a reduction in sales volumes, however.
“Coaling has been achieved at the CMJV sites, albeit in a ‘stop- start’ way as wet weather continues to pose constraints,” the company says.
“February rainfall was relatively benign, but March was significantly above average.”
The record rainfall has affected the entire coal chain which is currently running at low stockpiles across the Bowen Basin.
Throughput at the Dalrymple Bay Coal Terminal has been significantly impacted by limited coal availability;
leaving it functioning on run down stockpiles since wet weather began hampering coal production in November last year.
Macarthur Coal says it expects the Force Majeure announced late last year to remain in place at least until the end of April, though the miner expects a good recovery, including a reduction in port congestion, as the wet season begins to abate.
The
miner says its long term growth, particularly the development of reserves at its Middlemount and Willunga tenements, is dependent on infrastructure capacity in Queensland.
This includes planned expansions for the Wiggins Island and Abbot Point Coal terminals.
According to MCC, the Middlemount Project, which it jointly owns with Gloucester Coal (50 percent) has proven reserves of 96 Mt of coal per annum.
“Delivery of the rail spur is expected by the end of the 2011 calendar year after which production can begin,” the company says.
“We have a long term coal haulage contract in place with Pacific National for 3 Mt per annum from January 2012 to match capacity at Abbot Point.”
Similarly MaCarthur Coal has projects in development at Codrilla, which would require coal haulage to Moorvale and Willunga, which it sees as a possible alternative to Codrilla.
Willunga would produce LV PCI and thermal coal. It has a resource of approximately
164 Mt but would be dependent on the Wiggins Island expansion, for
operations to begin in 2014.
While Middlemount is expected to begin in 2011 once the rail spur is delivered, MCC says a decision on the fourth project is yet to be made and will be announced to the market during the year.