Peabody flags mine writedowns
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.