• Whitehaven coal production falls off a cliff, but still raked in $1.55 bn last quarter
  • Bellwether coal stock says tight supply and high prices for FY23 “and beyond”
  • Northern Star boss says mining labour issues have no quick fix

Whitehaven Coal (ASX:WHC) boss Paul Flynn says it is working with local councils to prevent weather delays ahead of the coming La Nina after it saw production fall 37% quarter on quarter and 22% year on year to 4Mt at its east coast coal mines in the September term.

Not to worry though, prices hit a record $581/t, against just $189/t a year ago, generating $1.55 billion in cash and driving WHC to a new cash position of $1.93b even after buying back 102.9m shares at a cost of $584.5m.

“With demand for high quality coal continuing to outstrip global supply, coal prices set another record in the September quarter and continue to be well supported,” Flynn said.

“We delivered strong operational performance in the September quarter at our Narrabri underground mine but our open cut operations were impacted by wet weather and flood related road closures in September.

“With La Niña forecast to be a feature through the Spring season, we have been working constructively with councils and developing measures to minimise the impacts of weather delays and flood related road closures as much as possible.”

It came the same day as BHP (ASX:BHP) reported a massive fall in coal production at its Mt Arthur mine in New South Wales.

Thermal coal is currently fetching US$392/t, with September seeing a record monthly average high GlobalCoal Newcastle price of US$434/t. The average 6000CV price of US$421/t across the quarter was 12% up on the June quarter average of US$377/t.

Whitehaven  sees thermal coal prices being supported throughout FY23 and beyond.

“Energy security was a continued focus during the quarter with continued strong demand, supply constraints and high prices for high quality thermal coal,” the company said.

“The impact of sanctions and embargoes on Russian coal is resulting in a high CV thermal coal trade flow response, where countries that typically do not take large volumes of high CV thermal coal are now moving to take advantage of cheaper Russian coal.

“Northern hemisphere coal inventories are adequate coming into the winter season; however, they are expected to be drawn down quickly and replenishing stocks with Russian coal is unlikely to occur under the current sanctions.

“There is also uncertainty around natural gas supply into Europe via the Nordstream pipelines, which has appreciably strengthened gas prices, making thermal coal significantly cheaper on a per gigajoule basis than gas. The coal to gas price differential in Europe is also apparent in the Asian market.

“La Niña and labour shortages may continue to impact production with strong demand for high-CV coal and extremely tight supply in the absence of Russian coal. In metallurgical markets, while pricing is relatively strong compared to historical levels, we expect further volatility with ongoing global economic pressures.”

At 14.2Mt, coal exports through the port of Newcastle for September fell 11.9% compared to last year and 15.5% down on the 18.9Mt shipped in the peak export year of 2019.

“Exports are down due to a combination of production impacted by weather, labour availability, COVID impacts and lower yield as producers maximise high CV coal production to take advantage of the differential between high CV and low CV prices,” Whitehaven said.



Whitehaven Coal (ASX:WHC) share price today:




Northern Star boss says it will take time to fix mining labour issues

Northern Star (ASX:NST) boss Stuart Tonkin says it will take years to deal with a skill shortage impacting the mining industry, blamed in part for a disastrous September quarter from fellow gold miner St Barbara yesterday.

Northern Star had no such problems, treading close to analyst expectations by selling 369,000oz of gold at all in sustaining costs of $1788/oz and all in costs of $2361/oz, with the higher all in cost number including a big uptick in growth capital and exploration spending.

That included 215,000oz at its flagship Kalgoorlie operations at $1762/oz AISC, with 111,000oz at $1541/oz at the Super Pit.

NST generated $255m in mine operating cash flow and $78m in net mine cash flow, its best number on that metric in three quarters.

The company has maintained its second half loaded guidance of 1.56-1.68Moz at $1630-1690/oz for FY23, with NST expecting to see improved performance as it increases the run rate at the Pogo mine in Alaska and completes the Thunderbox mill expansion in WA.

But, the gold miner continues to warn of labour issues in the WA market, which are impacting productivity across the industry. MD Stuart Tonkin said the situation is improving on where it was a short time ago when NST was “losing 20-40 truck drivers to the iron ore players in a quarter”.

But he said improving competency across the industry amid a severe skills shortage was no short fix.

“Absolutely it takes years so you can get people to a competency to get them operating at full efficiency, full speed,” he said. “For a lot of our our key front liners, it’s decades.

“The strength we have is the internal mining services division. We’ve kept a very stable team there and they are performing (to a) very high quality, high safety.

“But those challenges are for the sector where there was a skill shortage, there has been a dilution across the sector in that regard for everybody.

“So we have to increase efforts, energy, focus, training, supervision, and sometimes things just stop because you’re not prepared to go forward in that regard.”



Northern Star (ASX:NST) share price today: