Australian producer Whitehaven Coal expects the federal government's carbon-mitigation safeguard mechanism to cost the firm around A$1/t ($0.68/t) in 2023-24.
This will partly offset the benefits of higher production after a weak year to 30 June. Whitehaven's coal sales were at 16.63mn t in the 2022-23 financial year, down by 12pc on the year but above its guidance of 15.3mn-16mn t, which was cut from 16.5mn-18mn t in April. The firm expects coal production to ramp up in 2023-24, after a major longwall move at its Narrabri mine in the April-June quarter and the drying of pits.
Whitehaven's costs rose to an unaudited A$103/t in 2022-23, from A$84/t in 2021-22. Costs may ease in the year with higher volumes, but will include around A$1/t for emissions abatement under Canberra's safeguard mechanism. Whitehaven chief executive Paul Flynn welcomed adjustments for a slower transition to using industry average emissions intensity, but argued that it was unfair to treat underground and open-pit mines the same given the former's higher emissions intensity.
Whitehaven has to rebuild stockpiles that it ran down in January-June, but throughput at key ports is ramping up as mines dry out. "Volumes are lifting across the market but many mines are still dealing with the legacy of water on site that is requiring them to move coal around to meet environmental obligations," said Flynn.
The drier weather and resolution of most manning issues should allow Whitehaven to push up production, but Flynn warned that congestion at its 13mn t/yr Maules Creek mine as the firm moves from manned to automated trucks could still weigh on output.
Whitehaven sold 91pc high-grade thermal coal in April-June as it washed as much coal as possible to take advantage of the premium to lower grade coal, and sold semi-soft coking coal as high-grade thermal. This will continue into the new financial year as the spread still warrants it, according to Flynn.
Whitehaven received an average price of $177/t for thermal coal and $218/t for metallurgical coal during April-June, compared with $400/t and $280/t respectively for January-March. The Argus high-grade 6,000 kcal/kg NAR price averaged $161.33/t fob Newcastle and the 5,500kcal/kg NAR coal price $104.79/t during April-June, compared with $262.81/t and $126.51/t respectively for January-March.
Whitehaven delivered 299,000t of coal to Australian power stations in April-June at an average price of A$115/t from its lower-grade Werris Creek mine. This included a proportion of the firm's July-September obligations and was at a discount to the mandated cap of A$125/t for 5,500kcal/kg coal to reflect coal quality.
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