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Brian and Merilyn Lloyd (L-R)Leola Barclay, Ann Wright and Barbara Jones Gloria Brown and Darcy Sheather Construction Aboutusgeneric_1 csg Rosemary McLeod and     Laurel Weedon oy Fernie and Rachel Wight csg Greg Byrne, Downing; Ian Reed, QNP Jo-Anne Burke, DB Scaffolding; Susan McGuire, Mayogroup Port Linda Oliffe and Eugene McDonald Aboutusgeneric_2 dragline
Brian and Merilyn Lloyd (L-R)Leola Barclay, Ann Wright and Barbara Jones Gloria Brown and Darcy Sheather Construction Aboutusgeneric_1 csg Rosemary McLeod and     Laurel Weedon oy Fernie and Rachel Wight csg Greg Byrne, Downing; Ian Reed, QNP Jo-Anne Burke, DB Scaffolding; Susan McGuire, Mayogroup Port Linda Oliffe and Eugene McDonald

Massive hit for Curragh
COAL miner accepts a new reality on coal prices - not seen just 18 months ago
Wednesday 25 May 2016  

THE owners of the Curragh mine near Blackwater have slashed its paper value today, by around $700 million (pre-tax) in response to ongoing low coal prices.

Since the value of any coal mine is essentially just the coal price multiplied by the amount of coal in the deposit, less the costs to get the coal out of the ground and sold, the paper value of mines can change a lot depending on where we are in a price cycle.

However while the move is perhaps not unexpected,  Curragh’s owner Wesfarmers acknowledge that the significant devaluation reflects low prices have remained for longer than they expected.

“In a difficult industry environment, where global coal supply has proven to be more resilient than generally expected, Wesfarmers expects to recognise a non-cash impairment in the carrying value of Curragh in its FY2016 accounts of between $600 million to $850 million pre-tax,” the company said.

“This mainly reflects a slower forecast recovery in long-term export coal prices and higher volatility, including in exchange rates.

“Notwithstanding challenging market conditions, Curragh has maintained its relatively low-cost position and very strong safety record, and will continue to seek to deliver further benefits in these areas.”

To put the write-down in perspective, it was only a year and a half ago when Wesfarmers paid Peabody Energy $90 million for a Mineral Development Licence (MDL) between their existing Curragh North and South operations at Blackwater.

At that time, managing director Stewart Butel was more optimistic.

“The acquisition will augment the total base of coal reserves potentially available for mining and processing at Curragh’s coal handling and preparation plants by approximately 29 percent,” he said at the time.

“The acquisition of MDL 162 reflects Wesfarmers’ confidence in the longer-term outlook of Curragh’s export coal business, and is expected to extend Curragh’s mine life and provide future options to further optimise mine operations.”


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