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Greg Byrne, Downing; Ian Reed, QNP (L-R)Tina Vebel, Merill Bulst and Nick Bulst Steve Beale and Chris Dunphy, MIPEC Best Dressed Gent winner Robin Sellar. Aboutusgenericimage_3 csg Tara Flaherty and Rachel Mackie fifo Aboutusgeneric_1 (L-R) Tony, Jackie, Daly, Layla and Ruby Smith. Nicola Wilson and Charlotte Wilson. csg Jo-Anne Burke, DB Scaffolding; Susan McGuire, Mayogroup mining Construction
Greg Byrne, Downing; Ian Reed, QNP (L-R)Tina Vebel, Merill Bulst and Nick Bulst Steve Beale and Chris Dunphy, MIPEC Best Dressed Gent winner Robin Sellar. Aboutusgenericimage_3 csg Tara Flaherty and Rachel Mackie fifo Aboutusgeneric_1 (L-R) Tony, Jackie, Daly, Layla and Ruby Smith. Nicola Wilson and Charlotte Wilson. csg Jo-Anne Burke, DB Scaffolding; Susan McGuire, Mayogroup

Peabody’s amazing cost reductions
MINER smashing all records at its six local coal mines.
Wednesday 04 November 2015  

THE cost of producing coal at Peabody Energy’s Queensland mines has fallen 28 per cent to US$48.11 per tonne in the last three months - and set a new company record.

The embattled US based coal miner, whose shares have fallen 86 per cent in the last 12 months, released the astonishing results in its quarterly statements this week.

Despite losing more than $300 million across its whole business in the three months to September, the company says earnings from its Australian mines have increased more than 250 per cent to $34 million - all of which has come through massive cost reductions.

“Nearly $150 million in cost improvements overcame approximately $110 million in lower pricing,” Peabody said.

“Australian costs per tonne improved 28 per cent to $48.10 -  a record low for this platform which includes the benefit of lower currency, fuel rates, productivity improvements, workforce reductions and operational changes implemented in the second quarter.

“Four million tonnes of metallurgical coal averaged US$68.53 per tonne, and three point three million tonnes of export thermal coal averaged US$52.97 per tonne.”

Looking to the future, Peabody said further easing of demand in China for steel-making coal had seen the benchmark price for prime hard coking coal fall a further four per cent to $89 - the lowest level since 2004.

Peabody also says India is now the largest global importer of thermal coal, having overtaken China in the last three months.

However, despite this achievement, India's increase in imports of nearly 20 million tonnes has not offset China’s fall in imports of nearly 60 million tonnes, meaning the thermal coal market is unlikely to improve soon.

Peabody says around 80 per cent of metallurgical coal supply is not covering costs at the moment, and they expect seaborne coal supplies to fall 15 million tonnes as a result.

“U.S. metallurgical coal exports fell 17 per cent through September and are expected to decline 10 to 15 million tonnes in 2015,” Peabody said.

“Cutbacks have accelerated in the seaborne thermal market, particularly in the U.S. and Indonesia, where exports are down 39 per cent and eight per cent, respectively.

“Peabody expects additional coal production curtailments in response to current prices, and in addition, limited capital spending is anticipated to act as a future supply constraint.”

Peabody owns the Burton, Coppabella, Middlemount, Millennium, Morvale and North Goonyella Mines in Central Queensland as well as three mines in NSW.


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