Another mine on the market
COMPANY confirms selling flagship mine an option.
Wednesday 16 November 2016
Wesfarmers has confirmed today that it is exploring all options - including selling - the Curragh mine at Blackwater.
In a short statement the company said, nothing is in concrete, but it is looking at its options.
“Wesfarmers is continuing to consider a broad range of options, from operational to divestment initiatives, including recently seeking expressions of interest from external parties who may want to acquire the coal assets,” they said.
“There is no certainty this process will lead to a transaction and Wesfarmers will update the market further if and when appropriate.”
However, the recent explosion in coal prices has made it increasingly difficult to know whether now is the time to buy or sell a coal mine.
Early this year with metallurgical coal prices below $US90, the conventional wisdom among the risk taking mining entrepreneurs was that now was the cyclical bottom, with corporate sellers keen to do a deal. Today with record coal prices, things have changed.
However, in the case of Wesfarmers, they have forecast that their Curragh mine will only just break even this financial year, despite steelmaking coal prices increasing 300%.
The unusually wet spring and a seven-day shutdown of the CHPP for maintenance work last quarter slashed coking coal production by 24% meaning around 50% of Curragh’s export metallurgical coal sales for the remainder of this year will be “carryover tonnage” - sold at prices set before the current record highs.
“As a result, the resources business is expected to report a broadly breakeven earnings subject to production, weather events, shipping and currency,” they said.