Australia's Wesfarmers flags rail concerns impacting Jan-Jun fulfilled coal sales

Australia's Wesfarmers claimed Wednesday it expects its sales of metallurgical coal to be negatively influenced in the 2017-18 (July-June) fiscal year by rail concerns revealed just recently by rail operator Aurizon.

Wesfarmers, driver of the Curragh metallurgical coal mine complex, one of the world's largest, said in a half-year report it was anticipating its sales to be in the series of 8.5 million mt-8.8 million mt for the 12-month duration.

Its sales in the July-December initial fifty percent were up 8% year on year at 4.5 million mt, Wesfarmers claimed. This suggests its sales will certainly be lower at 4 million-4.3 million mt in the existing January-June second half.

"Aurizon's recently announced adjustments to its network running and also organization techniques are having an ongoing influence on offered rail ability," Wesfarmers claimed in its July-December results report.

"Integrated with an Aurizon train derailment in January 2018, which affected exports from the Port of Gladstone, Curragh's capacity to export coal will be affected during the 2nd half," it added.

Aurizon, driver of the Central Queensland Coal Network, introduced last week the network went to risk of losing 20 million mt/year of coal throughput due to a draft decision by the state of Queensland's competition authority.

The Queensland Competition Authority states that Aurizon's upkeep allowance for the following 4 year governing duration, which its recommended tariffs are based upon, must be A$ 817.3 million, below the A$ 920.6 million that Aurizon had actually been budgeting for.

Aurizon stated that going forward it will focus on lowest-cost maintenance over versatility and also reduced its above rail coal volumes guidance for financial 2017-18 to 210 million mt-220 million mt from the formerly anticipated 215 million-225 million mt.

In molecular sieve 5a , Wesfarmers announced it had actually agreed to offer Curragh to US coal manufacturer Coronada Coal Group for A$ 700 million.

As part of the deal, which remains subject to a variety of conditions prior to being finished, Wesfarmers will certainly receive 25% of the mine's export coal earnings produced above a recognized metallurgical coal cost of $145/mt, paid quarterly over the next 2 years.

The sale of Curragh is anticipated a long time during the present half year, Wesfarmers stated.

It estimates its fiscal 2017-18 sales mix will certainly be 46% difficult coking coal, 12% semi-soft and also 42% PCI.

Wesfarmers is also conducting a critical review of its 40% rate of interest in the Bengalla thermal coal mine in the nearby state of New South Wales, and has actually looked for expressions of rate of interest from possible purchasers.