HUNTER VALLEY COAL REPORT The Hunter Valley Coal Report is published weekly by Nadine Brierley ABN 92 506 051 400 © Copyright Nadine Brierley All rights reserved ISSN 1036-7454 07 September 2017 Number: 36/17
Yancoal Australia acquisition of Coal & Allied complete ...... 2 Peabody Energy to sell majority of Burton Mine to Lenton JV for $11 million...... 2 Stanmore Coal operational performance and improved coal prices drives profit margins ...... 3 AGL Energy releases statement on Liddell Power Station ...... 3 Federal Government commits $100 million in funding to greenfield exploration ...... 4 Warkworth Mining fined $50,000 for dam wall collapse ...... 5 Women in Resources National Awards Winners announced ...... 5 Moolarben Coal JV lodges application to renew Exploration Licence No. 6288 ...... 6 Queensland’s coal and gas fired generators keep State electricity supply secure ...... 6 TerraCom upgrades Blair Athol Resources and Reserves ...... 7 Support for construction of HELE coal fired plants ...... 8 ICE Coal Futures Monthly Report ...... 9 Safety ...... 11 Legislation ...... 12 Company News – AJ Lucas, Ausdrill, Austin Engineering, Bathurst Resources, Centennial Coal, CIMIC Group, Emeco Holdings, New Hope Group, RPMGlobal Holdings, Senex Energy, Stanmore Coal ...... 13 Diary Dates ...... 16 Personnel ...... 17 HVCCC Weekly Performance Report ...... 18 HVCCC Monthly Performance Report ...... 18 Port Waratah Coal Services Monthly Report ...... 19 Gladstone Ports Total Monthly Coal Exports ...... 19 TransCoal Port Congestion Graph - East Coast Australia ...... 20 Braemar ACM Weekly Focus ...... 21 DRY CARGO / BRAEMAR ACM Event Impact Analysis ...... 22
In its 28th year of publication
While every effort has been made to ensure accuracy, the Publisher does not accept responsibility for any errors or omissions and disclaims liability for all claims, which may arise from any person acting on the material contained within the report. 07 September 2017 Hunter Valley Coal Report No 36/17 2
Yancoal Australia acquisition of Coal & Allied complete Yancoal Australia Limited has completed acquisition of Rio Tinto Limited wholly-owned subsidiary Coal & Allied Industries Limited.
Yancoal took over management of Rio Tinto’s thermal coal business in the Hunter Valley region of New South Wales on 01 September 2017.
Rio Tinto will receive total consideration of $2.69 billion for the sale, together with customary adjustments for net debt and net working capital at completion. The $2.69 billion comprises $2.45 billion in cash and a further $240 million of unconditional guaranteed royalty payments. Under the terms of the sale, Rio Tinto may also receive an additional royalty linked to the coal price capped at $410 million.
With production from all Hunter Valley coal operations transferring to Yancoal, the Group’s guidance for thermal coal production in 2017 has been revised to 13-14 million tonnes, from 17-18 million tonnes previously.
The sale is of all of Rio Tinto’s shares in Coal & Allied Industries Limited, and includes all assets and liabilities of Coal & Allied and its subsidiaries.
The Coal & Allied group holds a 67.6 per cent interest in the Hunter Valley Operations mine, an 80 per cent interest in the Mount Thorley mine, a 55.6 per cent interest in the Warkworth mine, a 36.5 per cent interest in Port Waratah Coal Services and other undeveloped coal assets, including various landholdings.
Peabody Energy to sell majority of Burton Mine to Lenton JV for $11 million Peabody Energy Corporation has entered into an agreement to sell the majority of its Burton mine and related infrastructure to the Lenton Joint Venture for approximately US$11 million.
Peabody said that the Lenton Joint Venture will assume the reclamation obligations associated with the assets being acquired by the Lenton Joint Venture, reducing Peabody’s asset retirement obligation by approximately US$53 million while also releasing an estimated $30 million of restricted cash.
The Burton mine, located in Queensland's Bowen Basin, entered a care, maintenance and rehabilitation phase in December 2016.
The transaction is conditional on a number of regulatory and other requirements and completion is expected to take place in the first half of 2018.
The Lenton Joint Venture, of which New Hope Coal is a 90 percent participant, controls mining tenements that adjoin the Burton mine.
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Stanmore Coal operational performance and improved coal prices drives profit margins Stanmore Coal Ltd has reported a net profit of $12.035 million for the year ended 30 June 2017.
“The significant underlying improvement particularly in the second half of FY2017 was driven by operational performance together with improved coal prices,” Stanmore Coal said.
“FY2017 production results demonstrate continued improvement at the Isaac Plains Complex following the restart of the mine in 2016.”
Key highlights include: • Achieved product coal guidance, producing 1.204Mt. • 22.3Mbcm of overburden moved at a strip ratio of 13.4x, down from 13.7x in the previous corresponding period. • Significantly improved performance in H2 FY2017 with open-cut ROM tonnes increasing from 600kt in H1 to 916kt in H2. • Total Reportable Injury Frequency Rate for the year was 12.46 per million hours. • The Company renewed 800kt of metallurgical sales contracts with Asian customers during FY2017 for the following Japanese Fiscal Year 2017. These renewed contracts include an improvement in pricing relativity to the Hunter Valley Benchmark for semi-soft coking coal of approximately US$1.15 per tonne, to an average discount of US$0.625 per tonne. • The average sales price achieved during the year was US$104.9 per tonne (A$135.1 per tonne), increasing from US$60.4 per tonne (A$81.9 per tonne) in the pcp. • Isaac Plains East progressed by finalising negotiations with landholders, allowing the public notification process to be triggered. Targetted potential first coal production at Isaac Plains East is Q4 FY2018, subject to no objections during the public notification process and timely processing of the approvals.
Stanmore Coal said that the continued improvement in mining and yields supports the Company’s FY2018 guidance of 1.2Mt product tonnes (noting the 1.2Mt in FY2017 included 125kt of highwall mining tonnes which will not continue in FY2018). The operations will continue in Isaac Plains until the Isaac Plains East extension is approved and constructed.
“During FY2018 the dragline will undergo a planned shutdown. The mine has built considerable ROM and product stockpiles during FY2017 and the first months of FY2018 to minimise any impact of the planned shutdown.” Stamore Coal said.
AGL Energy releases statement on Liddell Power Station AGL Energy Limited has issued a media release stating that it notes speculation in relation to a potential sale of the Liddell Power Station, or extension of the operating life of the power station, following comments made by Prime Minister Malcolm Turnbull on 05 September 2017.
This follows media reports that the Federal Government is negotiating with AGL to extend the life of the coal fired power station for at least another five years.
Prime Minister Malcolm Turnbull has told Parliament that both he and Energy Minister Josh Frydenberg had already begun talks that would see Liddell stay open until 2027 at least, according to the media.
Mr. Turnbull is reported to have told parliament that the Australian Energy Market Operator’s (AEMO) annual report shows that the national market is vulnerable, especially in South Australia and Victoria, and that this situation would be worsened in 2022 when Liddell is due to close.
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“AGL has committed to the closure of the Liddell Power Station in 2022, which is the end of its operating life,” the Company said.
“AGL provided this advance notice in April 2015 to avoid the volatility created by the sudden exit from the National Electricity Market of other coal-fired power stations.”
AGL said that it recognises community and Government concerns in relation to energy security, as highlighted in the Australian Energy Market Operator’s 2017 Electricity Statement of Opportunities and continues to assess the capacity that will be needed post 2022 to replace Liddell.
“AGL will continue to engage with Governments, regulators and other stakeholders to deliver appropriate outcomes but notes that the company has made no commitment to sell the Liddell Power Station nor to extend its life beyond 2022.”
Meanwhile, Delta Electricity, operator of the Vales Point Power Station has confirmed that at this stage it has not been approached regarding acquisition of the Liddell Power Station.
Company spokesperson, Steve Gurney, stated that Delta is interested in acquisitions or development opportunities which support the reliability of electricity supply and sustains high quality jobs in Australia and that this includes opportunities in both the traditional coal fired sector and in the renewable energy sector.
“Delta supports an orderly transition to a low carbon future which also ensures a reliable supply of base load power” Mr. Gurney said. “There is still a role for coal for the foreseeable future. It is not about picking one technology over another, but ensuring that business and household consumers can have certainty of supply.” he said.
Mr. Gurney emphasised that the acquisition of Liddell Power Station and an extension of its operating life would need to be carefully considered on proper commercial terms. He did note that operating baseload power stations is a core capability of Delta which previously operated five major power stations when owned by the NSW Government.
The concept of extending the operating life of Liddell is new, given AGL’s stated position of shutting it in 2022. “A thorough due diligence process would need to be undertaken to understand the condition of the plant and the costs before any decision is made by Delta, but we would be prepared to undertake that exercise.” Mr. Gurney said.
Delta Electricity is the operator of the Vales Point Power Station on the NSW Central Coast and has development plans for a 45MW solar facility on a rehabilitated parcel of land at the Vales Point power station.
Delta is also exploring options for pumped hydro electricity in South Australia and has been participating in other prospective asset sales.
View the AEMO report here
Federal Government commits $100 million in funding to greenfield exploration The Federal Government will commit $100 million to secure additional private investment in vital greenfield mineral exploration to drive the next wave of mineral discoveries crucial to the resources sector and the Australian economy.
The Government will provide tax incentives for junior exploration companies to encourage investment and risk taking which are needed to underpin the future strength of our resources sector and the Australian economy.
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Prime Minister Malcolm Turnbull said that the Junior Mineral Exploration Tax Credit (JMETC) would allow the tax losses in greenfield exploration companies to be distributed as a credit to Australian resident shareholders.
“These tax incentives will encourage ‘junior explorers’ to take risks and to have a go at discovering the next large-scale mineral deposit,” he said.
“We want to back enterprise. We want to turn around the greenfields minerals exploration expenditure that have declined by almost 70 per cent over the past five years.”
Under the new $100 million Junior Mineral Exploration Tax Credit scheme, Australian resident investors of junior explorer companies will receive a tax credit where the exploration company chooses to give up a portion of their losses relating to their greenfields exploration expenditure in an income year.
The ability to immediately distribute tax credits to investors will make investing in a ‘junior explorer’ more immediately attractive and encourage investment in small exploration companies undertaking greenfields mineral exploration in Australia.
Warkworth Mining fined $50,000 for dam wall collapse The New South Wales Land and Environment Court has convicted and penalised Warkworth Mining Ltd $50,000 for the collapse of a sediment dam wall on 05 January 2016 near Singleton in the Hunter Valley.
Part of a sediment dam wall at the Warkworth mine collapsed following several days of heavy rain. Up to 4.4 megalitres of sediment laden water escaped into surrounding areas, including the nearby Wallaby Scrub Road reserve.
The incident occurred after Warkworth had modified the dam to increase its capacity, however, nether the design nor the construction work was undertaken or overseen by an engineer, nor did Warkworth subject the completed works to an appropriate risk assessment or other quality assurance processes. A section of the new embankment wall collapsed when water levels reached the heightened embankment wall for the first time.
Warkworth pleaded guilty to the offence. In addition to the $50,000 penalty, which is payable to the Environmental Trust for general environmental purposes, the Court ordered Warkworth to pay the prosecutor’s legal costs and to publish notices in the Singleton Argus and the Newcastle Herald detailing the conviction.
Warkworth Mining Ltd is part of the Coal & Allied and Rio Tinto group of companies.
Women in Resources National Awards Winners announced The winners of the 2017 Rio Tinto Women in Resources National Awards have been announced.
Gender Diversity Champion in Australia Resources Winner: Fiona Robertson, Non-Executive Director, Heron Resources (NSW) Highly Commended: Gabriela Love, Principal Mine Projects Engineer, Newcrest Mining Ltd (Vic)
Excellence in Company Diversity Programs and Performance Winner: St Barbara Limited (VIC) Highly Commended: BHP Billiton – Integrated Remote Operating Centre (QLD)
Outstanding Tradeswoman/Operator/Technician in Australian Resources Winner: Carolyn Dobson, Diesel Fitter, BHP Billiton Mitsubishi Alliance (BMA) (QLD) Highly Commended: Sharron Freitas, Production Group Leader, Alcoa of Australia (WA) 07 September 2017 Hunter Valley Coal Report No 36/17 6
Exceptional Young Woman in Australian Resources Winner: Rachel Leong, Lead Surveillance Engineer, Woodside Energy Ltd (WA) Highly Commended: Nikhat Nagin, Principal Engineering, BHP Billiton Mitsubishi Alliance (BMA) (QLD)
Exceptional Woman in Australian Resources Winner: Vanessa Torres, Vice President, Operational Infrastructure, BHP Iron Ore (WA) Highly Commended: Kirsten Molloy, Chief Executive Officer of the Hunter Valley Coal Chain Coordinator (NSW) Highly Commended: Karen Alexander, Manager Strategic Alliances, Hastings Deering (NSW)
Special Judges Awards Andrew Bigg, Operations Manager Mining and Mobile Maintenance, South32 GMECO (NT)
Industry Achievement Award Michelle Keegan, Vice President Strategy, Incitec Pivot Limited (VIC)
The Women in Resources National Awards is a partnership between the Minerals Council of Australia and its Northern Territory and Victorian branches, the Chamber of Minerals and Energy Western Australia, the Queensland Resources Council, the New South Wales Minerals Council and the Tasmanian Minerals and Energy Council, supported by various state Women in Mining Network branches.
Moolarben Coal JV lodges application to renew Exploration Licence No. 6288 Moolarben Coal Mines Pty Limited (ACN 108 601 672), Kores Australia Moolarben Coal Pty Limited (ACN 129132501) and Sojitz Moolarben Resources Pty Ltd (ACN 126287027) have lodged an application to renew Exploration Licence No. 6288. The Licence encompasses an area of 5079.86 hectares.
Queensland’s coal and gas fired generators keep State electricity supply secure The latest Australia’s Energy Market Operator (AEMO) report has been released.
Queensland Treasurer and Minister for Energy Curtis Pitt said “The AEMO report predicts that Queensland’s electricity generation, which is underpinned by coal and gas-fired generators and an increasingly diverse mix of renewable energy and supporting technologies, will be able to meet expected demand in all forecast scenarios.”
“Queensland’s supply is so secure, we will continue to export electricity supply interstate which means we can help cover predicted shortfalls in southern states due to extreme weather conditions like the heatwaves last summer,” Mr. Pitt said.
“The AEMO report also sets out that other states are not in the same secure position as Queensland, because of the closure and predicted closure of privately coal-fired power stations in southern states and lack of new supply coming online.
Mr. Pitt said that despite the Federal Government’s policy indecision leaving industry in the dark the Queensland Government has the policy settings right for renewables and the continuing security and reliability of Queensland electricity supply.
“Queensland has over 20 renewable energy projects with a capacity of 1,800MW that are either committed or under construction, many of which have not been factored in the AEMO report. This is on top of two large- scale solar projects.”
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“While no additional generation is needed in Queensland in the short to medium term for security, new renewable generation will help to put downward pressure on wholesale prices.”
“This report is more evidence that the Palaszczuk Government’s transition to a 50 per cent renewable energy target is both sensible and ensures security of supply and that the LNP’s push for a coal-fired power station is redundant,” he said.
“The Queensland Government’s Powering Queensland Plan promotes our sustainable energy mix including coal, gas and renewables to secure supply and put downward pressure on energy prices,” Mr. Pitt said.
“We directed Stanwell to bring Swanbank E gas-fired power station back online and alter its bidding strategies to help maximise downward pressure on wholesale electricity prices.”
“We have also appointed an independent Energy Security Taskforce to develop a Demand Management and Energy Efficiency strategy to better manage peak demand and improve the resilience of the electricity grid.”
“Even though Queensland is in an extremely secure position, as proven by the report, we will continue to plan for the integration of the next phase of renewables and supporting technologies to ensure we continue to have high security and reliability,” said Mr. Pitt.
TerraCom upgrades Blair Athol Resources and Reserves TerraCom Limited has announced a further upgrade to the Blair Athol Mine JORC Reserve and Resources.
JORC Reserves have been upgraded to 15.6 million tonnes (Mt) and increase the JORC Measured Resource to 21.9Mt.
TerraCom said that further work since it completed the acquisition of the Blair Athol Mine, which included the detailed assessment of all boreholes using historical data on site has enabled Reserves to be extended by 2.1Mt adding one extra year to mine life, which now totals 8 years based on ~2 million tonnes per annum (Mtpa).
The JORC Resource has improved in confidence with the JORC Measured Resource increasing 9.5Mt from 12.4Mt to 21.9Mt.
TerraCom said that it is in the process of further developing this increased JORC Measured Resource and plan to convert the economic areas of the Measured Resource into Reserves which could add an additional three to five years onto the Blair Athol Mine Life based on 2Mtpa derived from the Reserves estimate.
The coal reserves and resources have been estimated in accordance with the standards outlined in the JORC code (JORC, 2012) and the Coal Guidelines 2014.
Total open cut coal reserves for Blair Athol Mine Coal Reserve (Mt ROM) * 3 Seam 4 Upper 4 Lower Total Proved Nil 8.6 5.4 14 Probable 0.5 0.7 0.3 1.6 Total Coal Reserve 0.5 9.3 5.8 15.6 *Tonnages and qualities in the above table are expressed on a ROM basis, incorporating the effects of mining losses and dilution and on a 17.0% ROM moisture basis.
TerraCom Chairman Mr Wal King stated that “this reserve upgrade is significant for the Blair Athol Mine as it enables the mine plan to be extended to 8 years at ~2Mtpa”.
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Support for construction of HELE coal fired plants The construction of modern high efficiency low emission (HELE) coal plants in Australia is supported by former Environment Minister Graham Richardson.
Mr Richardson has indicated that as many of the older coal fired power stations are retired Governments should ensure their replacement with coal generation.
Minerals Council of Australia Executive Director, Greg Evans, said that Mr Richardson makes the valid point that this is the best mechanism to underpin affordable and reliable energy in the National Electricity Market and to provide support to both households and businesses as they struggle under the burden of rapidly rising electricity prices.
“HELE coal-fired generation is significant as it emits up to 50 per cent less than the oldest technology in place. It is also the cheapest and most reliable electricity source in Australia available 24 hours a day, every day,” Mr Evans said.
“Australia has ready access to the highest quality coal in the world and it is ideally suited for use in our own electricity generation mix when matched with this latest technology.”
“The independent report GHD and Solstice Development Services estimate a current construction cost of $2.2 million/MW (or $2.2 billion for 1000 MW capacity) for a modern HELE or ultra-super critical (USC) black coal plant based on savings accrued from utilising a brownfield site and sourcing specialised equipment from Asia,” said Mr Evans.
“The report also indicated HELE black coal is the lowest cost new generation option at $40-$78 per MWh (2017 prices) on a long run marginal cost basis, which includes achieving a return and meeting capital and operating expenses,” he said.
“Other synchronous generation had higher wholesale costs, including combined cycle gas at $69-$115 per MWh and open cycle gas at $179-$430 per MWh. Meanwhile variable renewable energy (VRE), which is not available 24 hours a day, also has higher costs, including solar at $90-$171 per MWh and wind at $64-$115 per MWh.”
Mr Evans stated that these technologies play a role but are more expensive and unsuitable without ‘firming’ or back up generation to emulate baseload performance.
“The report considers the required arrangements to secure funding for a HELE investment and notes the importance of securing a revenue stream for an investor by way of a longer term power purchase agreement and mitigation of future policy risk relating to potential changes in environmental legislation.”
Mr Evans said that the Minerals Council and the coal sector consider that as Australia modernises its electricity generation system we must ensure grid security and stability, and keep energy costs as affordable as possible.
“Mr Richardson reminds us that if we fail to do so, there will be serious economy-wide impacts, such as lower growth, falling productivity and lower living standards.”.
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ICE Coal Futures Monthly Report Report for the month of August 2017 Source: globalCOAL
Highlights • The recent coal market price rally continued throughout August. The Newcastle contract gained US$3.50/mt, to end the month at $95.30/mt. September prices in the Rotterdam and Richards Bay hubs followed a similar trajectory, gaining $6/mt and $4.20/mt respectively to reach $87.65/mt and $88.90/mt by month end • With Newcastle prices stealing a march on the other contracts, the FOB spread (RB/NEWC) widened • significantly, and volatility in the Newcastle hub increased early in the month, then remained steady at ~30% • While the US$ recovered some value mid‐month following the historic lows seen in July, by month‐end gains were eroded and values were flat m/m • Reflecting the seasonal summer lull, volumes of the gC ICE Newcastle contract were relatively muted, at 17.3mt
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Safety Weekly Incident Summary 30 August 2017 Source: NSW Government To view the Weekly Incident Summary for 16 August, please click here
The NSW Government has released Targetted Assessment Programme (TAP) Reports or Fatigue Management Practices and Emergency Management. Fatigue Management Practices may be viewed here Emergency Management may be viewed here
Underground conveyor equipment incident places workers at serious risk Source: NSW Government
The NSW Resources Regulator will lead a causal investigation into an incident in which seven coal mine workers sustained minor injuries during a conveyor extension in a longwall development panel at Ulan West Operations near Mudgee, NSW.
The purpose of this causal investigation is to enable the quick and full understanding of the causes of this incident, and publication of corresponding lessons to industry in a timely manner to reduce the likelihood of a recurrence.
At 12.36pm on 29 August 2017, seven workers were conducting a planned conveyor belt extension in maingate development panel MG5. This process involved advancing the dynamic move-up unit (DMU) which forms part of a system known as a flexible conveyor train (FCT). This system is used to transfer coal from a continuous miner to the panel mine conveyor. The DMU advancing process includes reducing tension in the panel conveyor belt system from its normal operating set-point, and isolating certain parts of the conveyor drive systems. The DMU is then advanced using hydraulic rams, which causes belt to be pulled from the conveyor storage unit (commonly known as a loop-take up) located at the conveyor drivehead.
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During this extension, an over-tensioning of the belt has occurred causing a failure of a linkage point between the DMU and the conveyor tail-end, breaking large steel components. The release of stored energy resulted in the tail-end unit being dragged some 15-18m by the belt, impacting on the installed conveyor structure, and also the workers who were standing in the area. No person was seriously injured.
A preliminary assessment undertaken by the regulator of the incident did not identify any material breaches of the Work Health and Safety Act 2011 and the regulator has no intention of conducting any further investigation into any potential non-compliance issues or taking any criminal enforcement action. The focus of ongoing inquiries is to identify the causal issues associated with the event in accordance with the Regulator’s Causal Investigation Policy.
Stakeholders have been invited to participate, including the mine operator, the equipment designer and manufacturer, workers, health and safety representatives and industry and mine safety and health representatives.
NSW Government – Planning & Environment Practising certificate applications are now open for the following statutory functions: • Mining engineering manager of underground coal mines • Mining engineering manager of coal mines other than underground mines • Mining engineering manager of underground mines other than coal mines • Mechanical engineering manager of underground coal mines • Electrical engineering manager of underground coal mines
If you currently hold a certificate of competence, you will need to apply for a practising certificate to exercise specific statutory functions as required under the Work Health and Safety (Mines and Petroleum Sites) Regulation 2014. Practising certificates are issued for five years and require the holder to undertake ongoing learning as part of the maintenance of competence scheme.
Practising certificates are being launched in stages, by type of practising certificate. To find out upcoming application dates for other statutory functions, view our implementation timeline.
To apply for a practising certificate for a statutory function listed above, complete and submit the Practising certificate application form available on the Government website. The implementation period for these functions runs until 31 August 2018.
Information on the maintenance of competence scheme and practising certificates is available on the Government website including frequently asked questions. For further advice contact the NSW Resources Regulator’s mining competence team on 4931 6625 or 1300 736 122 or email [email protected]
Legislation The Biodiversity Conservation Act 2016 (the Act) commenced on Friday 25 August 2017.
The legislation largely acts to codify the assessment and offsetting of biodiversity that is currently applied to mining through the Biodiversity Offsets Policy for Major Projects. A new assessment method may result in higher offset ratios depending on the type of offset and the management proposed.
Some of the products that support the legislation are not finalised. In addition, there is currently no assessment bilateral between NSW and the Commonwealth applying to the new laws. 07 September 2017 Hunter Valley Coal Report No 36/17 13
Company News – AJ Lucas, Ausdrill, Austin Engineering, Bathurst Resources, Centennial Coal, CIMIC Group, Emeco Holdings, New Hope Group, RPMGlobal Holdings, Senex Energy, Stanmore Coal AJ Lucas Group Limited has announced an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $3.8 million for the year to 30 June 2017 (FY2016: $14.6 million profit). Statutory EBITDA was a loss of $8.7 million (FY2016: $2.4 million loss). The statutory net loss for the year was $39.0 million (FY2016: $19.5 million) after net finance costs of $24.2 million (FY2016: $2.1 million). The Company said that the division’s first half revenue was affected by challenging conditions in the coal mining industry and the conclusion of a long-term contract. “However, the Division was able to secure work in the water, coal seam gas (CSG) and other adjacent markets that delivered revenue of $10.8 million,” the Company said. In the second half, despite adverse weather in the Bowen Basin which impacted the operations of a number of its customers, there was a recovery helped by increased demand from the coal mining industry, where the division has been most successful in recent years. Revenue from the coal mining sector in the fourth quarter totalled $22.1 million, and the division’s fourth quarter revenue and underlying EBITDA increased to $24.6 million and $2.8 million respectively. According to the Company, the division’s re-entry into the CSG and water drilling markets met with limited success. “The foray into water well drilling, on a fixed price contract, resulted in a loss; the project is expected to conclude in the first half of FY2018. Lower margins in the CSG business also contributed to the overall poor results of the division. Nevertheless, the division ended the year with a stronger order book, helped by increasing demand from the coal mining industry. Together with continuing focus on reducing costs, this is expected to lead to a significant improvement in performance in FY2018,” AJ Lucas said.
Ausdrill Limited has successfully completed its placement to institutional and sophisticated investors. “The Placement was strongly supported by existing and new institutional investors globally, and raised approximately $100 million through the issue of approximately 46.8 million fully paid ordinary shares at $2.14 per New Share,” Ausdrill said.
Austin Engineering Limited has announced FY17 revenue of $234.3 million up 24.5% in comparison to FY16. The Company’s Normalised EBITDA increased from $7.1 million in FY16 to $14.3 million in FY17. Austin said that market conditions in NSW coal improved during the year and provided strong revenues for Hunter Valley operations, although high labour costs impacted on profitability in this region. Market conditions improved significantly during the second half of FY2017, with major mining companies commencing a reinvestment phase in replacement components for mining fleets. Performance differed between the regional business units, as the timing of the mining industry recovery varied between commodities and regions. In addition, several large orders were received and completed contributing to the result. The Australian operations produced positive EBITDA of $9.5m, an increase in comparison to FY2016 $1.5m EBITDA. This was attributable to improved market conditions together with enhanced engineering designs and fabrication improvements, which enabled Austin’s major clients to take advantage of material payload increases and unit cost reductions across their fleets.
Bathurst Resources Limited (New Zealand) joint venture with Talley’s Energy Limited, BT Mining Limited, has completed the purchase of the assets of the three mines acquired from Solid Energy New Zealand Limited, subject to Deed of Company Arrangement. Full operations under BT Mining will commence 1 September 2017. The Solid Energy assets include two operating mines (Rotowaro and Maramarua) in the Waikato region of the North Island and the Stockton mine on the West Coast of the South Island. Bathurst said that the settlement amount was NZ$38.4m (Initial NZ46 million less closing adjustments) with a contingent payment of up to NZ$50m to follow over the next four years.
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Centennial Coal Pty Limited Springvale Red team has won the annual Western District Mines Rescue competition held at Western Mines Rescue Station at Lithgow, New South Wales on 01 September. Teams were challenged to deal with scenarios including underground search and rescue, fire-fighting, life support and first aid, and theory exercises. Moorlarben Underground, Airly Rhinos, Clarence Lions and Springvale’s two teams, Red and Blue contested the challenge. This was the first time Moorlarben had been represented, while Airly had not competed since 2012.
CIMIC Group Limited subsidiary Thiess has secured a contract extension at Harum Energy’s Mahakam Sumber Jaya (MSJ) Coal Mine in East Kalimantan, Indonesia. The contract extension, with further revenues of A$300 million, will run until March 2021, extending CIMIC’s Group’s 13-year mine development and operations at MSJ. Thiess has also been awarded a new contract at Gunung Bara Utama Coal Mine in the West Kurai region, East Kalimantan, Indonesia. Thiess will deliver total mining solutions from 2017 until 2024 under the contract, generating total revenue of approximately A$437 million.
Emeco Holdings Limited has announced that operating earnings before interest, tax, depreciation and amortisation (EBITDA) were up 54% to $83.5 million in FY17 and increased operating EBITDA margins were at 36% from 26% compared to FY16. Over FY17, Emeco saw a 61% reduction in total recordable injury frequency rate, down from 5.6 to 2.2, and a zero long-term injury frequency rate. Emeco Managing Director, Ian Testrow, said: “FY17 was a transformational year for Emeco, with substantially increased operating EBITDA and EBITDA margins and delivering its first year of positive operating EBIT since FY13. This improved financial performance was driven by our continuous focus on operational excellence, cost discipline and increased utilisation as we capitalised on improving market conditions and our greater scale following the merger with Andy’s and Orionstone.” “The outlook for Emeco is positive for FY18 and beyond. The merger and asset swaps resulted in an additional 500 pieces of equipment for Emeco in Australia, boosting our potential to take advantage of increasing mine site production levels due to stronger commodity prices and stronger demand for equipment,” Mr. Testrow said.
New Hope Group Board of Directors recently visited New Acland miners. The Board began the visit with their quarterly board meeting at the New Acland Mine then spent several hours touring mining operations and speaking with employees. Members of the Board, led by Chairman Robert Millner and Managing Director Shane Stephan, spent two days touring parts of the local area, including New Acland Mine and the Company’s Oakey Community Centre. “Our workers have had a pretty rough time over the past 12 months waiting for the Stage 3 Project to secure its state government approvals,” Mr Millner said. “At the end of the day they want to know whether their job and their family’s future are secure. We wanted to demonstrate to our workforce that not only do they have the overwhelming support of the local community, they have the full backing of the New Hope Board.”
NRW Holdings Limited subsidiary, Golding Contractors Pty Ltd has been awarded a 12 month contract valued at approximately $25 million (base value) to provide mining services to Broadlea Coal Management Pty Ltd (Fitzroy Australia Resources Pty Ltd) at the Broadlea Open-Cut Coal Mine in the Bowen Basin, approximately 150km south-west of Mackay in Central Queensland. The mining services include appointment as the Coal Mine Operator, responsibilities for all drill and blast via sub-contractor, overburden mining and coal mining activities. NRW Holdings Limited completed the acquisition of Golding Group Pty Ltd on 31 August 2017.
RPMGlobal Holdings Limited (RPM) has finalised the acquisition of 100% of the issued share capital of MineOptima, designers of optimal equipment access layouts for underground mines. RPM said that effective 31 August 2017, all necessary completion conditions of the acquisition agreement have been finalised, including RPM paying the cash on completion.
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Senex Energy Limited has been awarded 58km2 Surat Basin coal seam gas acreage near Miles by the Queensland Government for Australian domestic gas supply. Senex was awarded the acreage for nil consideration following a competitive tender. The high-quality acreage contains P50 recoverable gas volumes of 201 PJ1 and is capable of sustaining production rates of more than 30 terajoules per day at plateau. Senex expects to obtain regulatory approvals over the acreage in mid-2018. First gas is targetted for 2019. The Queensland Government has since opened close to 400 square kilometres of highly prospective land in the Surat and Bowen Basins. Queensland Resources Council (QRC) Chief Executive Ian Macfarlane said, “The New South Wales and Victorian governments must follow in the footsteps of the Queensland Government and work with industry, otherwise gas will just move from one State to another while prices rise. These domestic gas releases are fast tracked for production with Senex aiming to have gas flowing in under two years. That’s exactly when the Australian Energy Market Operator say New South Wales might be running short of gas.” QRC’s current data shows that in 2015-16, Queensland’s gas industry contributed $12.8 billion to the States economy and supported 65,000 jobs.
Stanmore Coal Limited has extended its bonding and working capital facilities arrangements between its operating subsidiary Stanmore IP Coal Pty Ltd and Taurus Mining Finance Fund for a further two years. Stanmore has increased its Bonding Facility to US$29.0 million and its Working Capital Facility to US$22.0 million. Stanmore Coal said that the renewal of the facilities addresses any uncertainty around its funding profile and provides clarity through to production.
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Diary Dates 10 Sept 22nd Annual Miners Memorial Day Service 2017 Federation House 67A Aberdare Road Cessnock NSW Date subject to change – please contact CFMEU Northern Mining office on 1300 712 791
13 – 14 Australian Coal Preparation Society – Queensland Symposium Sept Emerald QLD
19 Sept 2017 Queensland Miners Memorial Day Service 2017 Redbank Plains Ipswich QLD
20 Sept Upper Hunter Economic Breakfast 2017 Future of Energy and the Hunter Muswellbrook http://www.hrf.com.au/news-events/events/economic-breakfasts-upper-hunter
20 – 22 AusIMM Tenth International Mining Geology Conference 2017 Sept 2017 Hobart TAS
25-29 Sept International Conference on Coal Science &Technology and 2017 Australia – China 2017 Symposium on Energy Beijing International Convention Centre Beijing China
29 Sept Hunter Business Mining 2017 Guest Speaker: Scott Winter, Managing Director, MACH Energy
6 – 18 Oct 13th AusIMM Underground Operators’ Conference 2017 2017 Gold Coast QLD
23 – 24 Oct 15th Annual Longwall Conference 2017 Crowne Plaza Hunter Valley NSW
30 Oct – 02 International Mining and Resources Conference IMARC 2017 Nov 2017 Melbourne VIC
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28 – 29 Nov JOGMEC Techno Forum 2017 2017 Palace Hotel Tokyo 29 Nov University of Wollongong Coal Science Fair 2017
06 Dec Australian Institute of Geoscientists - Digging Deeper 2017 Seminar 2017
Personnel Boart Longyear Limited has announced the following changes to its Board of Directors in conjunction with the implementation of its recapitalisation. Deborah O’Toole and Bret Clayton, Peter Day, Jeffrey Long, Rex McLennan and Conor Tochilin have retired from the Board. Richard Wallman, Kyle Cruz, Lawrence First, Jason Ireland, Matthew Sheahan and Robert Smith have joined the Board as Non-Executive Directors, effective 01 September 2017. Gretchen McClain, Marcus Randolph and Jeffrey Olsen continue as Directors, with Mr Randolph continuing to serve as Chairman.
LogiCamms Limited has announced the appointment of Charles Rottier as a Non Executive Director of the Company. Mr. Rottier is also Chair of the Energy Pipelines CRC, and has previously held the following roles: Former CEO Austin Engineering; and Former EGM Engineering and Construction - Transfield Services.
Swick Mining Services Limited has announced the resignation of Chief Executive Officer Vahid Haydari, effective 16th of October 2017.
TerraCom Limited has announced the appointment of Wallace (Wal) Macarthur King AO as Non- Executive Chairman of the Board of TerraCom effective 04 September 2017. Mr King will replace Cameron McRae who will step down as Executive Chairman but remain on the Board as a Non Executive Director. TerraCom has also announced that, further to this change, David Stone has resigned as an Executive Director effective immediately. Neville McAlary, responsible for the Blair Athol Mine as Australia Business Unit Head and Sam Bowles, is responsible for the BNU Mine as Mongolia Business Unit Head with both report directly to Mr King.
Realm Resources Limited has advised that further to the notice regarding the resignation of Glen Lewis, the operative date for Mr Lewis’ departure is 8 September 2016. As of that date Mr Lewis will also cease to be a Director of Realm Resources Limited. The Board has also advised that Peter Briggs has been appointed on an interim basis as Chief Executive Officer of Realm. Realm Resources said that Mr Briggs, a Mining Engineer, is very familiar with the Foxleigh mine, having worked as a senior member of the acquisition team in 2016.
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HVCCC Weekly Performance Report Report for 28 August – 03 September 2017 Source: Hunter Valley Coal Chain Co-ordinator (HVCCC)
Coal Delivery • Planned rates were 278kt below target while Actual inbound performance was 296kt below the Declared Inbound Throughput (DIT). Total losses finished the week at 8.2% compared to the 2017 declared target of 7.2% • September month-to-date throughput is currently 1,424kt (173.2Mtpa) which is 193kt below the DIT, with total losses of 5.4%.
Shiploading - Port Waratah Only • Planned rates were 582kt below target while Actual outbound performance was 1,012kt below the Declared Outbound Throughput (DOT). September month-to-date shiploading is currently 928kt (112.8Mtpa), 379kt below the DOT. • Port Waratah port stocks finished the week at 2,209kt, an increase of 667kt from the previous week.
Coal Chain Demand • September nominations are currently 5.9Mt. • Based on terminal demand the Port Waratah vessel queue is estimated to be less than five at the end of the month. • At Port Waratah, there were 21 vessels in the offshore queue at the end of the week.
HVCCC Monthly Performance Report Report for August 2017 Source: Hunter Valley Coal Chain Co-ordinator (HVCCC)
Coal Delivery • August planned throughput of 14,210kt (167.3Mtpa) finished 1,348kt below target while Actual throughput finished the month at 12,755kt (150.2Mtpa), 1,682kt below the HVCC Declared Inbound Throughput (DIT). Total losses finished the month at 10.2% compared to the 2017 declared target of 7.2%.
Shiploading - Port Waratah Only • August planned outbound throughput of 9,779kt (115.1Mtpa) finished 977kt below target while Actual outbound throughput finished the month at 7,982kt (94.0Mtpa), 1,698kt below the Declared Outbound Throughput (DOT). • Port Waratah port stocks finished the month at 2,205kt, an increase of 471kt from the beginning of the month.
Coal Chain Demand • August actual vessel arrivals were 9.5Mt with a Port Waratah vessel queue of 28. • September nominations are currently 5.5Mt and based on terminal demand, the queue at Port Waratah is estimated to be less than five at the end of the month.
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Port Waratah Coal Services Monthly Report Report for the month of August 2017 Source: Port Waratah Coal Services
Receivals Aug 2017 YTD 2017 YTD 2016 Carrington Road 1,184 5,802 Rail 1,246,314 9,738,584 9,918,217 Total 1,247,498 9,744,386 9,918,217
Kooragang Rail 7,209,051 62,037,124 61,381,410 Total Receivals 8,456,549 71,781,510 71,299,627 Annualised Receivals 99.6Mtpa 107.8Mtpa 106.9Mtpa
Shiploading Carrington 1,290,810 9,723,348 10,042,923 Kooragang 6,715,884 60,848,944 61,262,820 Total Shiploading 8,006,694 70,572,292 71,305,743 Annualised Shiploading 94.3Mtpa 106.0Mtpa 107.0Mtpa
Port Stocks at end of month Carrington 135,286 Kooragang 2,078,554 Total 2,213,840
Vessels Aug 2017 YTD 2017 YTD 2016 Vessels arrived (Tonnes) 9,722,116 71,974,866 72,833,221 Vessels Loaded 94 804 795 Turnaround (Days) 4.63 3.41 3.89 Average shipment size (Tonnes) 85,178 87,776 89,693 Average Vessel Queue 18 12 13
Gladstone Ports Total Monthly Coal Exports Coal totals for the Month of June 2017 Source: Gladstone Ports Corporation Country Tonnes exported % Japan 1,689,457 28.47% India 1,611,173 27.14% China 1,293,986 21.80% Taiwan, Province of China 576,976 9.72% Korea Republic of 575,116 9.69% Brazil 162,199 2.73% Australia 27,000 0.45% Totals 5,935,907 100%
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TransCoal Port Congestion Graph - East Coast Australia 04 September 2017 - The overall vessel queue decreased from 82 ships last week to 73 this week. Queensland’s queue decreased from 53 ships last week to 52 ships this week. New South Wales’ queue increased from 29 ships last week to 21 this week.
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Braemar ACM Weekly Focus 29 August 2017
Vessel Australian Round Voyage Far East Mediterranean/Continent DWT Mediterranean/Continent Far East Last This Last This Last This Change Change Change Week Week Week Week Week Week 28,000 $7,250 $8,000 $750 $4,250 $4,350 $100 32,000 $7,750 $8,500 $750 $4,500 $4,600 $100 52,000 $10,000 $10,500 $500 $4,500 $5,000 $500 $18,500 $18,500 $0 58,000 $10,750 $11,000 $250 $5,000 $5,250 $250 $19,000 $19,000 $0 74,000 $9,484 $9,543 $59 $3,576 $3,750 $174 $16,943 $17,250 $307 180,000 $17,753 $18,219 $466 $5,812 $5,148 -$664 $28,958 $29,532 $574 Note: NOTE: The trades 28K, 32K, 52K & 58K DWT sizes rates are assumed to be DOP South East Asia. All other sizes are assumed DOP North Asia.
Vessel DWT 1 year period 3 years period 28,000 7,250 7,000 52,000 9,000 8,750 74,000 9,250 9,750 180,000 12,000 12,250
CAPESIZE The Pacific started slowly after the holiday in Singapore but proceeded to grow more active with a number of miners looking to cover their requirements for mid-September dates. The recent surge in bunker prices suggests owners are more inclined to lock in TCT returns and current C5 bids remain unfixed. On the C5 $7.30/tonne was bid and offered at $7.50/tonne. Cargoes from Malaysia requiring prompt tonnage were reported to have covered high-$5.00/tonne and the market is waiting to see if more miners join to cover second half September.
It was quieter in the Atlantic but sentiment improving once again and there was growing interest in ballasting and north Atlantic trade. We still see about 17 ships that can make Brazil within September with about 7 cargoes still requiring cover. For October the outlook is positive, last done was reported at $16.35 basis 1-10 October with encouragement to repeat at the same level.
PANAMAX The Panamax market saw rates rising this week in both basins. Steady ECSA and USG grain exports kept the Atlantic busy and in the Pacific there was also a heathy amount of cargo with fixing around mid-$10,000/day. Indonesia to China saw an increase in cargoes with owners raising rates to $10,000/day. NoPac rates improved with fresh enquiries in the market and fixing levels were at low/mid-$10,000/day levels for LME types vessels opening Japan/South Korea and a slight premium for Kamsarmaxes. Trips out of ECSA were rumoured to be fixing at $11,000/day plus a ballast bonus of $575,000.
HANDYSIZE, HANDYMAX & SUPRAMAX The Pacific picked up this week as a lack of tonnage raised rates. Index types delivery Singapore are now fixing close to $12,000/day for Indonesia coal or Australian round voyage to China. The Far East saw a tightening of tonnage as ships near Hong Kong lost up to ten days loading or discharging due to last week’s typhoon. Short period rates remain in the $10,000/day area with an eco Ultramax commanding low- $11,000/day for 3-5 months.
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The Handy Pacific market in Asia has been firm since last week with rates pushing up. Tonnage has been tight in SEAsia and there were quite a few orders on the Australian coast. In the Far East rates have remained firm, most 38,000 Handysize vessels are now asking for $9,000/day for short period. NoPac has been very quiet out of CIS for coal and steel to Far East. Rates are expected to stabilise as we see more tonnage opening for September dates.
Commodities (USD) Coal (Del. China) Ther. Newc.6.3k Change Ther. Kalim. 5k Change Cok.Prem.Oz Change $97.50 $1.00 $62.00 $1.00 $211.00 $7.00
Bunkers (USD) Port 380 IFO Change 180IFO Change MDO Change Singapore $316.50 $3.50 $320.50 $3.50 $477.00 $12.50 Hong Kong $327.50 -$5.50 $331.50 -$5.00 $494.50 $5.00 Japan $339.50 $5.00 $343.50 $5.50 $419.00 $7.00 Sth Korea $334.50 $0.00 $354.50 $0.00 $509.50 $12.00 Bunkers as at 04 Sept 2017 (Source: Universal Bunkering Pty Ltd).
Indices Date 04 Sept 21 Aug Change BHSI 491 466 25 BSI 863 817 46 BPI 1,275 1,349 -74 BCI 14 2,313 2,584 -271 BDI 1,215 1,266 -51 As at 04 Sept 2017 (Source: Baltic Exchange)
DRY CARGO / BRAEMAR ACM Event Impact Analysis 05 September 2017
Chinese July coal railings climb 23% on year • Chinese railways transported 178m tonnes of coal in July, jumping 23% from the same month last year, and climbing 5% from June • This has brought China’s total coal railings over January-July to 1.24bn, increasing 18% year-on-year • The strong performance was fuelled by soaring domestic coal production and demand, and weaker hydro production • The increased domestic coal transportation has contributed to weaker coal imports over recent months
Top Chinese coal producing province Shanxi to limit coal production • The major coal producing province of Shanxi plans to cap its coal production at 1bn tonnes by 2020, which will be a 4% rise from the 961.2m tonnes mined in 2015 • Thermal coal consumption in China is presently growing much faster, up 8% over January-July 2017 compared to last year • If this limit on coal production in the largest producing province is combined with continued strong demand growth, it could lead to domestic supply shortages and rejuvenated demand for coal imports 07 September 2017 Hunter Valley Coal Report No 36/17 23