PRIME PO­SI­TION

As Aus­tralia’s largest in­de­pen­dent pro­ducer of pre­mium qual­ity coal, White­haven’s coal is in de­mand for both en­ergy and steel-mak­ing.

The Australian Mining Review - - FRONT PAGE - RAY CHAN

Coal is a cor­ner­stone Aus­tralian in­dus­try, in de­mand for both en­ergy and steel-mak­ing. It’s also the source of bil­lions of dol­lars’ worth of roy­al­ties, mainly from mines in Queens­land, Vic­to­ria, and NSW, where Aus­tralia’s largest in­de­pen­dent pro­ducer of pre­mium qual­ity coal, White­haven Coal, is lo­cated.

Aus­tralian coal is in de­mand for both en­ergy and steel-mak­ing.

Its high-en­ergy, low ash char­ac­ter­is­tics ide­ally match the re­quire­ments for high ef­fi­ciency, low emis­sion (HELE) coal-fired power plants be­ing built through­out Asia, while the high grade met­al­lur­gi­cal coals are among the best in the world for mod­ern steel mak­ing.

Aus­tralian coal can also re­duce emis­sions when com­pared to low­erqual­ity coal from other ex­porters. Sup­plier re­li­a­bil­ity, prox­im­ity to key mar­kets and good in­fra­struc­ture avail­abil­ity puts Aus­tralia in a strong po­si­tion to take ad­van­tage of grow­ing de­mand from ex­ist­ing cus­tomers such as Ja­pan, China, Tai­wan and Korea, as well as newer buy­ers such as Viet­nam, the Philip­pines and Thai­land.

Coal min­ing in Aus­tralia is a so­phis­ti­cated and hi-tech ac­tiv­ity.

Con­tin­u­ous im­prove­ments in min­ing tech­nol­ogy, oc­cu­pa­tional health and safety and en­vi­ron­men­tal per­for­mance have en­sured that Aus­tralia is an ef­fi­cient and re­li­able pro­ducer of high­qual­ity ther­mal and met­al­lur­gi­cal coals for the in­ter­na­tional mar­ket.

WHITE­HAVEN COAL

The com­pany’s stal­wart rep­u­ta­tion is solid as a rock and it shows no sign of rest­ing on its lau­rels.

It op­er­ates four mines, three open cut and one un­der­ground, in the Gunnedah Coal Basin in North West NSW, pro­duc­ing high-qual­ity met­al­lur­gi­cal and ther­mal coal for ex­port to ad­vanced and de­vel­op­ing economies across North and South East Asia.

They are com­ple­mented by two high­qual­ity, near-term de­vel­op­ment as­sets: Vick­ery, near Gunnedah, and Winch­ester South, in Queens­land’s Bowen Basin. White­haven’s high qual­ity coal helps power re­gional economies through its con­tri­bu­tion to en­ergy gen­er­a­tion and steel pro­duc­tion and is sought af­ter for its unique prop­er­ties, in­clud­ing the fact it de­liv­ers among the low­est car­bon emis­sions per tonne of coal con­sumed in the seaborne trade.

In­creas­ingly, coun­tries in the Aus­tralasian re­gion are look­ing to HELE coal-fired power as a crit­i­cal com­po­nent of the en­ergy mix be­cause it does not force them to choose be­tween their eco­nomic as­pi­ra­tions and their car­bon emis­sions re­duc­tion obli­ga­tions.

CON­TRI­BU­TION AND COM­MIT­MENT White­haven proudly claims to de­liver value to cus­tomers, its work­force, share­hold­ers, lo­cal com­mu­ni­ties and sup­pli­ers by de­vel­op­ing and safely and re­spon­si­bly op­er­at­ing high-qual­ity, cost-ef­fi­cient, long-life coal as­sets.

A com­pany spokesman said its ap­proach was prag­matic and specif­i­cally ori­ented to those ar­eas where we know we can have a pos­i­tive im­pact.

“This starts with pro­mot­ing lo­cal eco­nomic growth through per­ma­nent job cre­ation in the com­mu­ni­ties around which our oper­a­tions are based,” he said.

“Our peo­ple are our great­est as­set and our best ad­vo­cates, not only be­cause they work in the lo­cal ar­eas around our mine oper­a­tions, but also be­cause they live lo­cally and are part of the so­cial fab­ric of their com­mu­ni­ties.

“Our com­mit­ment to lo­cal pro­cure­ment, and our fo­cus on build­ing ca­pac­ity among re­gional sup­pli­ers seek­ing to work with us, recog­nises the con­tri­bu­tions of lo­cal en­ter­prise to long-term com­mu­nity pros­per­ity and co­he­sion.”

The spokesman said the com­pany helps build lo­cal com­mu­nity ca­pac­ity and vi­a­bil­ity through in­ter­gen­er­a­tional in­vest­ment in ed­u­ca­tion, health­care, skills train­ing and in­fra­struc­ture.

“We do this through di­rect dis­cre­tionary con­tri­bu­tions, or in­di­rectly via vol­un­tary plan­ning agree­ments and min­ing roy­al­ties,” he said.

“We aim to see the ben­e­fits of our oper­a­tions ex­tend be­yond our di­rect work­force and be­yond the life of any sin­gle mine.”

To­day, about 75pc of the 2400-strong work­force (of which 9pc iden­ti­fies as Indige­nous) lives and works in the towns and re­gional cen­tres im­me­di­ately sur­round­ing its oper­a­tions, and White­haven plays a sig­nif­i­cant role in sus­tain­ing and help­ing build ca­pac­ity in these com­mu­ni­ties.

“We have al­ways be­lieved lo­cal com­mu­ni­ties should be the dis­pro­por­tion­ate ben­e­fi­cia­ries of our pres­ence and have taken care to put this be­lief into ac­tion as we have grown,” the spokesman said.

PER­FOR­MANCE

In FY 19, White­haven:

• Con­trib­uted $515k in do­na­tions and spon­sor­ships.

• Spent $333.9m with 350 lo­cal sup­pli­ers.

• Paid $323.8m in taxes and roy­al­ties to gov­ern­ments, of which $225.9m was roy­al­ties.

• Paid $189.9m in wages and salaries.

MAULES CREEK OPEN CUT MINE Run-of-mine (ROM) coal pro­duc­tion for the quar­ter was 2.362mt, 39pc above the pre­vi­ous cor­re­spond­ing pe­riod (PCP).

Min­ing ef­forts in the com­par­a­tive pe­riod fo­cussed on over­bur­den move­ment in sup­port of box-cut de­vel­op­ment. Ac­cord­ing to the lat­est an­nual re­port, ROM coal pro­duc­tion in the quar­ter re­flected the re­build­ing of em­ployee num­bers, which saw a full op­er­a­tor pro­duc­tion com­ple­ment achieved at the end of the quar­ter.

In the March 2020 quar­ter, works to sup­port in­creas­ing the vol­ume of in-pit dump­ing con­tin­ued.

Over the next three years the pro­por­tion of over­bur­den ma­te­rial dumped in-pit will in­crease to 100pc, which is ex­pected to in­crease op­er­a­tional pro­duc­tiv­ity and to de­crease unit costs.

Year to date ROM coal pro­duc­tion is 17pc be­low PCP which, as pre­vi­ously re­ported, was af­fected by labour short­ages and pro­duc­tion dis­rup­tions due to drought and bush­fires.

Since De­cem­ber 2019, Maules Creek has been re­cruit­ing ex­pe­ri­enced and clean­skin em­ploy­ees to en­sure the fleet is fully de­ployed in Q4 FY20.

White­haven Coal man­ag­ing di­rec­tor and CEO Paul Flynn said that the com­pany fully met man­ning re­quire­ments at Maules Creek and is now in­vest­ing in the skills de­vel­op­ment to achieve full util­i­sa­tion of equip­ment and pro­duc­tiv­ity of the work­force, with skill lev­els of clean­skins ex­pected to im­prove in com­ing months.

The re­turn to full man­ning and sched­uled ROM coal pro­duc­tion from the Bray­mont seam in the June quar­ter un­der­pin Maules Creek’s pro­duc­tion guid­ance for FY20.

ROM coal pro­duc­tion was weighted to the end of the quar­ter, which re­sulted in both saleable coal pro­duc­tion and sales be­ing be­low the quar­ter’s PCP, and has led to higher coal stocks at the end of the pe­riod than in that pe­riod .

Eq­uity sales of met­al­lur­gi­cal coal for the quar­ter were 0.3mt, or 21pc, of sales vol­ume.

Au­ton­o­mous haulage (AHS) of over­bur­den has com­menced. As planned, a fleet of six EH5000 trucks and ex­ca­va­tor was in op­er­a­tion in March. Dur­ing Q4 FY20, ad­di­tional labour re­sources will be trained and de­ployed to al­low for seven-day op­er­a­tion of AHS by end of the fi­nan­cial year.

NARRABRI UN­DER­GROUND LONGWALL MINE

March quar­ter ROM coal pro­duc­tion was 1.562mt, 10pc be­low the PCP and 22pc be­low the year-to-date pe­riod. ROM coal pro­duc­tion ramped up af­ter com­plet­ing the longwall re­lo­ca­tion from LW108 to LW109 in Jan­uary.

Fol­low­ing a strong pro­duc­tion per­for­mance through Jan­uary and Fe­bru­ary, ROM coal pro­duc­tion in March was im­pacted for 20 days by a weight­ing event which caused a de­fer­ral of 500-600Kt of longwall coal pro­duc­tion.

The longwall hy­draulic leg cylin­ders, which were up­graded dur­ing the move from LW108 to LW109, have per­formed well.

YTD ROM pro­duc­tion re­flects the im­pact of the eight-week sched­uled longwall move in Q2 FY2020. Saleable coal pro­duc­tion and sales of pro­duced coal were down on PCP, re­flect­ing the lower ROM coal pro­duc­tion.

The in­ven­tory draw­down sup­ported sales vol­umes, with sales for the quar­ter in­clud­ing 0.3mt of lower CV fault-ef­fected ther­mal coal pro­duced from the end of LW108. Met­al­lur­gi­cal sales were 0.15mt for the quar­ter.

TARRAWONGA MINE

Tarrawonga ROM pro­duc­tion of 0.639Mt was 8pc down on PCP, due to the im­pact of rain events in Fe­bru­ary and March. Saleable coal pro­duc­tion and sales of pro­duced coal vol­umes were fur­ther im­pacted by both a de­crease in by­pass coal as a re­sults of the mined coal mix, and lo­calised flood­ing on the haulage cor­ri­dor be­tween the mine and Gunnedah coal han­dling and pro­cess­ing plant.

Dur­ing the March quar­ter, com­mis­sion­ing of the new EH4000 trucks was on­go­ing, to be fi­nalised in April 2020. In­stal­la­tion of sup­port­ing in­fra­struc­ture has com­menced, with com­ple­tion in Q4 FY20.

WERRIS CREEK MINE

Werris Creek ROM coal pro­duc­tion of 0.385Mt was 20pc down on PCP and 28pc down on year-to-date. This de­crease re­flects lo­calised ge­o­log­i­cal losses in the pit, a con­tin­u­a­tion of dif­fi­cult min­ing con­di­tions around un­charted un­der­ground work­ings and rain de­lays, which has re­sulted in lower saleable coal pro­duc­tion and sales of pro­duced coal.

The fi­nal quar­ter of the year is ex­pected to see a greater con­tri­bu­tion of ROM coal from min­ing the lower seams in the Werris Creek min­ing se­quence.

These thicker seams have his­tor­i­cally de­liv­ered an in­crease in ROM pro­duc­tion in the quar­ter that they are mined.

DE­VEL­OP­MENT PROJECTS

Stud­ies con­tinue to be car­ried out to ad­vance White­haven’s three main de­vel­op­ment projects: the Narrabri Un­der­ground Mine Stage 3 Ex­ten­sion Project, the Vick­ery Ex­ten­sion Project, and the Winch­ester South Met­al­lur­gi­cal Coal Project.

These projects un­der­pin White­haven’s plans to ex­pand man­aged ROM pro­duc­tion in the next 10 years. While coal mar­kets in the March quar­ter have demon­strated their re­silience, volatile fi­nan­cial mar­ket con­di­tions have caused White­haven to con­tinue to be cau­tious in al­lo­cat­ing cap­i­tal to ex­pan­sion.

White­haven does not ex­pect to con­sider mak­ing a Fi­nal In­vest­ment De­ci­sion in re­la­tion to these projects in 2020. Projects will con­tinue to be the sub­ject of White­haven’s strict cap­i­tal al­lo­ca­tion frame­work.

Ex­pen­di­ture in­curred on ex­pan­sion and growth projects by White­haven dur­ing the March quar­ter was $6.9m, re­flect­ing en­gi­neer­ing stud­ies re­lat­ing to Narrabri Stage 3 En­vi­ron­men­tal Im­pact State­ment (EIS) stud­ies and prefea­si­bil­ity de­sign work for the Vick­ery Ex­ten­sion and Winch­ester South.

NARRABRI UN­DER­GROUND MINE STAGE 3 EX­TEN­SION PROJECT

The project seeks to con­vert Narrabri’s ex­ist­ing ex­plo­ration li­cence into a min­ing lease and use the ex­ist­ing por­tals, CHPP, rail loop and as­so­ci­ated in­fra­struc­ture to ex­tract, process and ship 80-100mt of ROM coal us­ing the longwall min­ing method.

The project in­volves ex­tend­ing the longwall pan­els planned for the min­ing lease south of the cur­rent main roads into the con­tigu­ous Narrabri South Ex­plo­ration Li­cence area, to ex­tend the ap­proved life of the mine by about 14 years, from 2031 to 2045.

The project has re­ceived its Sec­re­tary’s En­vi­ron­men­tal As­sess­ment Re­quire­ments from the NSW Gov­ern­ment as well as its EPBC Act re­fer­ral from the Fed­eral Gov­ern­ment.

White­haven has been in­cor­po­rat­ing these re­quire­ments in the prepa­ra­tion of an EIS which it plans to lodge with the NSW Gov­ern­ment Depart­ment of Plan­ning, In­dus­try and En­vi­ron­ment (DPIE) in Q1 FY21.

VICK­ERY EX­TEN­SION PROJECT

Open cut and un­der­ground min­ing was un­der­taken at Vick­ery by Rio Tinto un­til the sec­ond half of the 1990s when oper­a­tions ceased. The Vick­ery open cut project was ap­proved in Septem­ber 2014 to pro­duce up to 4.5mt ROM coal per an­num.

Works nec­es­sary to main­tain the cur­rent ap­proval in good stand­ing have been com­pleted and the ap­proval for the Vick­ery open cut project ex­pires in Septem­ber 2034. The Vick­ery Ex­ten­sion Project seeks con­sent from the NSW Gov­ern­ment to in­crease the ap­proved Vick­ery open cut project to op­er­ate at up to 10Mtpa with on­site pro­cess­ing and rail­ing ca­pac­ity.

The NSW Gov­ern­ment DPIE is fi­nal­is­ing its whole of gov­ern­ment (WOG) re­port on the Project. The WOG re­port will be used by the NSW In­de­pen­dent Plan­ning Com­mis­sion (IPC) to com­plete its fi­nal re­view and pre­pare its de­ter­mi­na­tion.

The Min­is­ter for Plan­ning and Pub­lic Spa­ces has re­quested the IPC con­vene a sec­ond pub­lic hear­ing; the IPC is giv­ing con­sid­er­a­tion to how best to hold a pub­lic hear­ing in light of cur­rent re­stric­tions on pub­lic gath­er­ings.

Progress on de­sign work for the CHPP, rail spur, and other site in­fra­struc­ture con­tin­ued dur­ing the quar­ter as did plan­ning for op­er­a­tional readi­ness and mine plan­ning. Draft man­age­ment plans in­clud­ing those for noise, air qual­ity, cul­tural her­itage and traf­fic man­age­ment con­tinue to be re­fined.

These man­age­ment plans are sched­uled to be fi­nalised in the three to six month pe­riod fol­low­ing re­ceipt from DPIE of the con­di­tions of ap­proval.

WINCH­ESTER SOUTH MET­AL­LUR­GI­CAL COAL PROJECT

The pro­posed Winch­ester South open cut met­al­lur­gi­cal coal mine, sit­u­ated in Queens­land’s Bowen Basin, con­tin­ues to progress through the Queens­land Gov­ern­ment’s ma­jor project de­vel­op­ment process. Stud­ies to sup­port draft­ing of the EIS have been pro­gressed.

Progress on de­sign work for the CHPP, rail spur, and other site in­fra­struc­ture con­tin­ued dur­ing the quar­ter.

Work con­tin­ues on the maiden JORC Re­serve es­ti­mate for the project with an ex­pected re­lease date in Q4 FY20.

THE ROLE OF COAL

White­haven’s prod­ucts are es­sen­tial in­puts for con­tin­ued eco­nomic de­vel­op­ment in ad­vanced and emerg­ing economies across the re­gion.

Its busi­ness is lever­aged to strong and con­tin­u­ing de­mand for high-qual­ity coal in the Asian re­gion.

Ac­cord­ing to the IEA New Poli­cies Sce­nario (NPS), global ther­mal coal con­sump­tion is ex­pected to be sta­ble out to 2040, with coal likely to re­main the sin­gle largest source of elec­tric­ity gen­er­a­tion world­wide through the fore­cast pe­riod. There are also de­mand trends at the re­gional level that are counter-cycli­cal to more sub­dued

global de­mand trends.

Min­ing at White­haven Coal’s Maules Creek mine.

Maules Creek mine at night.

White­haven’s Narrabri un­der­ground coal mine.

White­haven’s Tarrawonga coal mine.

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