Peabody flags mine write­downs

The Weekend Australian - - BUSINESS REVIEW - MATT CHAM­BERS MIN­ING

US coal gi­ant Peabody En­ergy will take equip­ment write­downs on its North Goonyella mine in Queens­land in its third-quar­ter profit re­port and suf­fer un­spec­i­fied fi­nan­cial im­pacts, af­ter a fire stopped min­ing there in­def­i­nitely.

The out­age has helped boost prices of high-qual­ity Queens­land cok­ing coal, adding to sup­ply con­cerns over coal rail owner Aur­i­zon’s fight with state reg­u­la­tors and com­ing at a time when China’s en­vi­ron­men­tal poli­cies have boosted de­mand.

There is no in­di­ca­tion of when or if Peabody’s flag­ship Goonyella North mine will restart.

“While still too early to of­fer mean­ing­ful in­sights into the fi­nan­cial ef­fects or tim­ing of next steps, the com­pany ex­pects fi­nan­cial im­pacts to fu­ture pe­ri­ods,” Peabody said yes­ter­day.

“Peabody in­tends to pro­vide an ini­tial look at fi­nan­cial and other im­pacts at the time of thirdquar­ter earn­ings, in­clud­ing record­ing a pro­vi­sion for the third quar­ter re­lated to equip­ment ex­pected to be sealed in the com­pleted long­wall panel.”

St Louis-based Peabody will re­port its third-quar­ter re­sults on Oc­to­ber 30.

In­dus­try re­ports say the equip­ment that will be sealed in is 76 roof sup­ports, with the rest of the min­ing long­wall hav­ing been re­moved as part of a sched­uled change af­ter the sec­tion of coal that was be­ing mined was com­pleted. Force ma­jeure no­tices have been is­sued to cus­tomers.

Bench­mark cok­ing coal fu­tures on the Sin­ga­pore Ex­change rose $US3 to $US216 a tonne on Thurs­day night, up from $US197 on Septem­ber 28, when the fire was first an­nounced.

Peabody said it would seal the com­pleted long­wall panel where gas emis­sions were first en­coun­tered and would per­ma­nently seal an area where high meth­ane lev­els were con­cen­trated.

Un­der­ground coal mine fires are no­to­ri­ously dif­fi­cult to con­tain and re­cover from. The pre­vi­ous big Aus­tralian un­der­ground coal mine fire, at Xs­trata’s Blake­field South mine in the Hunter Val­ley in 2011, stopped pro­duc­tion for 18 months.

Peabody has tem­po­rar­ily sealed three of the mine’s five en­trances and is in­ject­ing high­mois­ture in­ert gases to dis­place oxy­gen and re­duce the con­di­tions for a fire.

“Sam­pling of un­der­ground gases has shown lev­els on gen­eral down­ward trends in the past two weeks, with the ex­cep­tion of when the GAG unit (which in­jects the in­ert gases) was un­der­go­ing main­te­nance,” Peabody said.

“The one open shaft con­tin­ues to emit lit­tle or no wa­ter vapour or white smoke. Air qual­ity mon­i­tor­ing equip­ment re­mains in place around the perime­ter of the mine with con­tin­ued good re­sults.”

El­e­vated gas and tem­per­a­tures were no­ticed at the mine on Septem­ber 1, dur­ing a long­wall move which sparked an evac­u­a­tion.

The sit­u­a­tion was an­nounced to the US Se­cu­ri­ties and Ex­changes Com­mis­sion on Septem­ber 19, with no­ti­fi­ca­tion of a fire on Septem­ber 28. North Goonyella is Peabody’s high­est-qual­ity cok­ing coal mine, pro­duc­ing 2.9 mil­lion tonnes last year.

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