Miners still on tenterhooks
QLD PEABODY still at risk of being caught up in the United States storm.
Wednesday 04 May 2016
THE auditor of Peabody Energy Australia’s latest full year accounts has warned the company might struggle to distance itself from the Chapter 11 Bankruptcy protection proceedings currently underway against its parent company Peabody Energy in the US.
Peabody Energy Australia operates the Middlemount, Coppabella, Millennium, North Goonyella, Moorvale and Burton mines in Queensland as well as another three mines in NSW, which altogether employ more than 3000 people.
The Queensland operations have been one of Peabody Energy’s best performing assets, thanks mostly to the lower Australian dollar which has boosted their revenues and allowed them to turn a small profit. Which is the exact opposite of the situation in the US where the strengthening dollar has cut income and forced them to file for Bankruptcy protection with more than $6 million of debt.
While Peabody Energy Australia's directors said they were: “satisfied that reasonable grounds exist to believe the company will be able to pay its debts as and when they become due and payable”, Ernst & Young Auditor Andrew Carrick had some doubts.
He pointed to sections of the accounts that warned that the $US250 million loan facility provided to the Australian operations by another Peabody Energy subsidiary, may not be enough to cover a suite of possible costs flowing back to Australia from the proceedings in the United States.
“There is significant uncertainty whether the company (Peabody Energy Australia Coal) will continue as a going concern,” he said.
Any extra costs carried by the Australian operations might be enough to tip the delicate balance between costs and revenue that currently exists, forcing Peabody to consider offloading some or all of the Australian mines.
A clearer picture of how things are going is expected in the next fortnight when Peabody releases its quarterly results. They will show the current cash margin for the Australian mines following a resurgent metallurgical coal price that has increased more than 10 percent in the last month to a high of around A$130 a tonne.