Silver bullet for Blackwater?
Thursday 21 April 2016
A higher coal price is the silver bullet solution to many of the issues confronting Blackwater at the moment - and for the first time in years - it’s happening.
While they are off a very low base, coal miners have been nonetheless buoyed by a five percent rise in the metallurgical coal price yesterday due to both renewed optimism about the economies of Asia and the USA, and the realisation that across the globe significant reductions in coal production are occurring.
A case in point is at the nearby Curragh mine where coal production fell by more than a quarter over the three months to March.
However that could soon change with overburden removal increasing 12 percent over the same period, as the mine’s owner Wesfarmers added extra resources to the process of removing the dirt covering the mineable coal seam.
However according to Wesfarmers, the production cuts were more about the weather than a strategic scaling back in production.
“Coal production for the quarter was 1,837,000 tonnes (comprising 1,191,000 tonnes of metallurgical coal and 646,000 tonnes of steaming coal), 25.5 percent lower than the previous quarter,” they said in a statement
“Significantly lower coal production was a consequence of a number of significant wet weather events that restricted operations at the mine, with in excess of 500 mm of rainfall received in the quarter.
“ As a result, force majeure was declared for the period 4 February through to 1 March 2016 under contracts with affected customers and suppliers.
“For the 12 months to 31 March 2016, metallurgical coal production decreased by 18.3 per cent to 7,486,000 tonnes and steaming coal production declined by 1.0 per cent to 3,259,000 tonnes.”
The reduction in production is good news for the coal sector where a persistent oversupply has kept prices at historic lows.The rally in commodity prices across the board has also been great news for Blackwater’s biggest employer BHP - who has seen its share price rise more than a third in 10 days.
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