HUNTER VALLEY COAL REPORT ABN 92 506 051 400 © Copyright Nadine Brierley All rights reserved ISSN 1036-7454 26 July 2018 Number: 29/18

Yancoal Moolarben saleable coal production up 33% in June 2018 quarter ...... 2 Peabody Energy Australian coal sales volumes drive revenue increase ...... 2 coal exports up 3.8Mt in past six months ...... 3 Yancoal Austar mine prohibition to remain in place ...... 4 South32 metallurgical coal production up 37% despite longwall moves ...... 4 Mount Owen Continued Operations Modification 2 on display ...... 4 Bounty Mining Cook Colliery hard coking coal steadily increases to 100,000t in June quarter ...... 5 Anglo American Moranbah and Grosvenor mines drive metallurgical coal production increase ...... 6 UQ ranks Number One for Mining and Mineral Engineering ...... 6 Dysart station $31 million upgrade will secure electricity supply ...... 7 Mackay $3.6 million Resources Centre of Excellence to boost jobs ...... 7 Realm Resources Foxleigh Mine Complex makes good progress in June quarter ...... 8 METS sector allocated $1.8 million to support innovation and jobs growth ...... 8 Proposed restrictions on use of labour hire a backward step - MCA ...... 9 Company News – Atrum Coal, Centurion Transport, CIMIC Group, South Maitland Railways, Tigers Realm Coal...... 10 Safety ...... 11 Diary Dates ...... 13 Personnel ...... 14 TransCoal Port Congestion Graph - East Coast Australia ...... 15 HVCCC Weekly Performance Report ...... 16 Braemar ACM Weekly Scope ...... 16 DRY CARGO / BRAEMAR ACM Event Impact Analysis - 20 July 2018 ...... 18

In its 29th 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. 26 July 2018 Hunter Valley Coal Report No 29/18 2

Yancoal Moolarben saleable coal production up 33% in June 2018 quarter Yancoal Australia Limited operations produced a total 12.70 million tonnes saleable coal in the June 2018 quarter, up 129% on the year prior and total sales volume of 9.92 million tonnes, up 96% on the year prior.

Moolarben saleable coal production was 4.08 million tonnes in the June 2018 quarter, up 33% on the year prior, with open cut and underground operations maintaining high production rates established in the first quarter of the year and maximising increased rail availability.

The Company said in the quarterly report that Moolarben remains on track to commence the first scheduled longwall move at its underground mine during the second half of the year.

Mount Thorley Warkworth continued to meet production and throughput targets throughout the reporting period, achieving saleable coal production of 2.99 million tonnes. In April, Mount Thorley Warkworth implemented its second round of fleet roster restructures to improve operational efficiencies.

Hunter Valley Operations achieved 3.52 million tonnes saleable coal for the reporting period, maintaining robust production rates throughout the reporting period.

Stratford Duralie saleable coal production was in accordance with expectations, as mining activity at the Duralie mine continues to wind down and operational focus moves to the commencement of production of the 1.2 million tonnes run of mine coal per annum Stratford extension project in the latter half of the year. Stratford Duralie achieved 0.12 million tonnes, down 19% on the year prior.

Attributable production includes only 51% interest in Hunter Valley Operations on the basis that Glencore is entitled to a 49% interest with economic effect from 1 September 2017.

In , the Yarrabee open cut continues to meet production forecasts, having overcome wet weather conditions experienced during the previous three-month reporting period, and maintained strong production rates to achieve saleable coal production of 0.77 million tonnes, up 23% on the year prior.

The Middlemount joint venture produced 1.06 million tonnes, up 24% on the year prior, benefitting from sustainable production rates and improved weather conditions.

Peabody Energy Australian coal sales volumes drive revenue increase Peabody Energy Corporation has announced that revenues for the second quarter increased 4 percent over the prior year to $1.31 billion driven by a 20 percent increase in Australian metallurgical and thermal sales volumes.

Prior-year Australian metallurgical volumes had been impacted by temporarily reduced shipments in Queensland from Cyclone Debbie.

Peabody’s Australian platform continued to produce substantial results, with total Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $266.1 million contributed in the quarter.

Australian Adjusted EBITDA increased $88.3 million over the prior year as a result of 45 percent higher metallurgical volumes and further strengthening in seaborne thermal and low-vol PCI pricing.

“Peabody's diversified portfolio continues to generate substantial returns, led by 39 percent margins from the company's Australian platform, as we capitalise on continued strength in seaborne metallurgical and thermal coal fundamentals,” said Peabody President and Chief Executive Officer Glenn Kellow.

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Australian sales volumes totalled 7.9 million tons, including 2.9 million tons of metallurgical coal sold at an average price of $143.98 per ton and 2.9 million tons of export thermal coal sold at an average price of $78.68 per ton, with the remainder delivered under a long-term domestic contract.

The Australian metallurgical coal segment continued to lead the company in revenues of $417.5 million, an increase of 45 percent compared to the prior year, largely due to sustained demand for quality metallurgical coal and healthy seaborne pricing levels.

Costs per ton declined $19.70 per ton to $89.37 per ton as operational performance improved following an extended longwall move due to gas drainage at the Metropolitan mine in the second quarter of 2017.

“As expected, second quarter costs improved relative to the first quarter of 2018 and are expected to be within the company's annual guidance range for the year,” Peabody said.

“The Australian metallurgical segment once again led the company in Adjusted EBITDA contributions of $158.5 million, as Adjusted EBITDA margins increased to 38 percent.”

Peabody said that Australian exports rebounded from the prior year effects of Cyclone Debbie, increasing approximately 7 million tonnes through May compared to the prior year.

“While the rail and labour issues in Queensland continue to garner significant media attention, Peabody has yet to be impacted by delays in rail services and continues to closely monitor the situation.”

Port of Newcastle coal exports up 3.8Mt in past six months Port of Newcastle has achieved a steady half year trade result with coal exports performing strongly in June. Year-to-date exports were tracking marginally behind the same period in 2017.

“The Port had seen coal exports to China increasing by 3.8 million tonnes over the past six months, alongside the steady demand for the Hunter’s high quality thermal coal from customers in Japan, South Korea and Taiwan, Port of Newcastle Acting CEO, Simon Gelder said.

“Coal will continue to provide the stable base for the Port’s growth, in tandem with a number of key strategic development opportunities that we have underway to support our future diversification plans. These include the $33 million Newcastle Bulk Terminal and the Newcastle Container Terminal, both of which will be transformational for the Port, our customers and the local economy,” said Mr. Gelder.

“The continued growth in project cargo cements Newcastle’s position as the east coast’s port of choice for oversized cargos.”

“Wind turbine shipments have continued to roll into the Port over the past six months, along with oversized equipment to support the large infrastructure projects currently underway across NSW. Tunnel boring equipment for the Sydney Metro City & Southwest project is shortly due to arrive at our Mayfield 4 Berth. We are also expecting shipments of the rail assets for the project later in the year.”

“The market is recognising the distinct competitive advantages of the Port of Newcastle. Customers are already benefitting from the Port’s close proximity to NSW's northern, north-western, western and far-western catchment areas,” said Mr. Gelder.

“Our uncongested berthside connections to the national road and rail networks means that our customers can also transport their cargo directly to-and-from the berth or the terminal.”

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Overall the Port has handled 81.4 million tonnes of trade, valued at $AUD 13.5 billion from January to June 2018.

Yancoal Austar mine prohibition to remain in place A prohibition notice issued from the NSW Resources Regulator to Yancoal Australia Limited halting all underground longwall production at the Austar Coal Mine will remain in place.

The notice was issued in response to a significant coal burst event on May 17, 2018. While no workers were injured in this incident, the coal burst reportedly caused major damage to the longwall shearer and an estimated 60 tonnes of coal was ejected from the longwall face.

The Regulator had previously prohibited cutting at the longwall after a coal burst event on 16 March 2018. Prior to this, the mine had only been allowed to undertake controlled cutting under strict conditions to test additional controls to mitigate a coal burst risk, which included the maintenance of a 50-metre exclusion zone for workers.

Yancoal applied to the Industrial Relations Commission for a review under the NSW Work Health and Safety Act. One of Yancoal’s arguments was that the Resources Regulator had explicitly refused to cancel the prohibition notices after a request.

In dismissing Yancoal’s application, the Commission found that the Regulator did not refuse to cancel the prohibition notices, and instead noted that the Regulator was corresponding with Yancoal in relation to the seriousness of the circumstances at the mine, and ongoing concern for the safety of workers.

The judgment further found the Regulator continued to assess the situation at the mine by requesting more information, including seeking confirmation that key duty holders were fully aware of the situation. The Commission found that the Regulator was still considering the company’s request for the cancellation of the prohibition notices.

South32 metallurgical coal production up 37% despite longwall moves South32 Limited metallurgical coal production increased by 37% (or 295kt) to 1.1 million tonnes (Mt) as the Company achieved an annualised mining rate of more than 6Mt throughout the month of June, despite longwall moves at both Appin and Dendrobium during the June 2018 quarter

Illawarra Metallurgical Coal saleable production decreased by 40% (or 2,829kt) to 4.2Mt in FY18 as the Appin colliery recovered from an extended outage in H1 FY18.

The Company said that its metallurgical coal continues to be sold with reference to market indices and that it has achieved a realised price equivalent to the premium low-volatile hard coking coal index on a volume weighted M-1 basis in FY18.

Mount Owen Continued Operations Modification 2 on display Mount Owen Pty Limited’s Mount Owen Continued Operations Modification 2 proposes the modification of SSD-5850 to allow for access to an additional approximately 35 million tonnes of run of mine coal from the North Pit and the extension of the approved Mount Owen Mine life by an additional 6 years to 2037.

The Proposed Modification is considered to be largely the same development as that approved under SSD-5850 as the overall nature and scale of the development remains similar to the approved Mount Owen Operations.

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There is no change to approved production limits, mining methods, coal processing, product transportation or operating hours. The majority of the development remains unchanged from that which is approved.

The Environmental Impact Statement for the proposal is on public exhibition from 26/07/2018 to 22/08/2018. Opportunity for public submissions is available.

Bounty Mining Cook Colliery hard coking coal steadily increases to 100,000t in June quarter Bounty Mining Limited has announced that coal production at its recommissioned Cook Colliery in Queensland continued to steadily increase throughout the June 2018 quarter.

Quarterly production at Cook Colliery totalled 100,335 tonnes of mid-volatile hard coking coal as the ramp-up at the mine continues.

Bounty states in its report that it has adopted the more flexible bord and pillar mining method at the colliery and that it will maintain the longwall system in a care and maintenance position underground.

“There is potential to recover and operate the longwall system in the future but there are no immediate plans to take such steps,” Bounty said.

“Mining will be undertaken in three development phases in the Cook South area, driven by the short-term lack of continuous miners and roof bolters for the higher productivity place change mining method and the time to change the mine layout from the current longwall system to a bord and pillar underground mining layout.”

“Plans developed at the start of 2018 outlined a faster ramp-up of operations but delays in the Company’s ASX listing, delays in delivery of equipment to site, shortage of skilled workers and a ventilation constraint have necessitated a more conservative approach,” the Company said.

“Despite this, the mining rate is expected to be at a nominal 1 million tonne per annum run-of-mine rate from September 2018. Place change mining will be introduced in the June quarter of 2019, which will further increase production rates.”

Bounty said that the initial development phase is to open up areas with the single-pass continuous miners in preparation for implementing a high production Sumping Continuous Miner method commencing September.

“Three continuous miners are now operating underground, with a fourth sumping machine going underground in September. These are mining mostly the top 3.2 metres of the 4.3 metre seam and installing roof and rib bolts in an advancing mining phase. The remainder of the seam is extracted later in the mining sequence to enable maximum recovery.”

Bounty said that it also had very good performance from the coal handling and preparation plant; “Previously at Cook, mining had included dilution from the shale roof and also from mining of faults in development and with the longwall.”

“Bounty has maintained mining within the coal seam and has only mined minimal quantities of shale roof and as a consequence the coal processing yields have been very high with an average of 88% over the March and June quarters. Over 85% of the product has been coking coal,” the Company said.

“These numbers are an improvement on a budgetted 80% yield and 80% coking coal component,” said Bounty Mining.

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Anglo American Moranbah and Grosvenor mines drive metallurgical coal production increase Anglo American Plc has announced that for the June 2018 quarter, metallurgical coal production increased by 33% to 5.3 million tonnes driven by strong performance at the Moranbah and Grosvenor mines in Queensland.

Thermal coal export production decreased by 1% to 7.2 million tonnes due to challenging geology. Guidance revised to 28-30 million tonnes.

The Company’s export metallurgical coal production increased by 33% to 5.3 million tonnes as Grosvenor ramped up performance following geotechnical challenges in 2017. Moranbah production also improved following strong operational performance, and due to timing of longwall moves.

Thermal Coal South Africa export thermal production decreased by 8% to 4.4 million tonnes as Khwezela and Goedehoop ramp down in areas transitioning to closure and Mafube continues to transition into a new pit. This was partially offset by strong operational performance at Greenside.

Domestic thermal coal production decreased by 66% to 2.8 million tonnes primarily due to the completion of the sale of the Eskom-tied operations (New Vaal, New Denmark and Kriel) to Seriti on 1 March 2018.

Attributable export thermal coal production from Cerrejón increased by 13% to 2.8 million tonnes.

(1) Includes export primary production and secondary production sold into export markets. Comparatives have been restated to align with current presentation.

Anglo American said that full year production guidance for Metallurgical Coal remains unchanged at 20-22 million tonnes.

Full year production guidance for Export Thermal Coal has been revised down to 28-30 million tonnes (previously 29-31 million tonnes) due to dust-related stoppages at Cerrejón and challenging geology at sections of South African operations approaching end of life.

UQ ranks Number One for Mining and Mineral Engineering The University of Queensland (UQ) has ranked first in the world for Mining and Mineral Engineering in global subject rankings released by ShanghaiRanking.

UQ Vice-Chancellor and President Professor Peter Høj said that the University’s engineering area performed particularly strongly, making the top-20 universities in the world in five subjects, including the number-one ranking for Mining and Mineral Engineering.

Mechanical and Mining Engineering Head of School Professor Ross McAree said students studying at UQ gain access to world class programmes and leadership in engineering education, research and development.

“These results are a testament to our School’s high level of industry collaboration, as well as our research quality and its impact across the resources sector,’ he said. 26 July 2018 Hunter Valley Coal Report No 29/18 7

The ShanghaiRanking’s Global Ranking of Academic Subjects 2018 ranks 4000 universities across 54 subjects, on indicators including research productivity and quality, the extent of international collaborations, and academic recognition.

Dysart station $31 million upgrade will secure electricity supply Dysart substation in Queensland is to undergo a $31million upgrade after more than 40 years in operation.

Queensland Energy Minister Dr Anthony Lynham said that the $31m upgrade would further secure electricity supply for the Dysart township and neighbouring communities, a number of coal mines and the regional rail network.

“The Dysart substation has served the region since 1974 and will be rebuilt to ensure that it continues to provide safe and reliable supply,” Dr Lynham said.

“Work at the joint Powerlink Queensland/ Ergon Energy substation will support up to 48 jobs and is expected to be completed in mid-2020.”

Powerlink Chief Executive Merryn York said the upgrade work was necessary to extend the substation’s technical service life.

“Powerlink’s work involves an extensive asset overhaul including the installation of two new 132/66kv transformers, substantial switchgear replacement, and upgrading of substation internal roads and the emergency response helipad,’’ Ms. York said.

“We aim to commence our upgrade towards the end of July 2018 with works contained within the existing switchyard area which will help us avoid disruptions to supply,” Ms. York said.

Energy Queensland Chief Executive Officer David Smales said following on from Powerlink’s works, Ergon Energy equipment in the joint substation would be upgraded as well to support the local area.

“We plan to replace our old regulators with new 66/22kV 20 MVA transformers to continue providing our customers with a safe and reliable power supply for many years to come,” Mr. Smales said.

“It is expected Ergon Energy crews from Rockhampton and contractors will begin work onsite late in 2018.”

Mackay $3.6 million Resources Centre of Excellence to boost jobs The Queensland Government-funded Mackay Resources Centre of Excellence is to feature a simulated underground coal mine for training and research purposes.

Queensland Minister for State Development, Manufacturing, Infrastructure and Planning, Cameron Dick, said that the $3.6 million funding will increase opportunities for apprentices and drive research and innovation in the region’s rebounding mining sector.

“The Mackay Resources Centre of Excellence will be a one-of-a-kind facility in Queensland that will tap into local expertise to provide training and education, biomedical research, product innovation and demonstration, as well as having tourism potential,” he said.

Assistant Minister for State Development and Member for Mackay Julieanne Gilbert said the Mackay Resources Centre of Excellence would be a gamechanger for her community.

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“Our government is focussed on generating knowledge-based jobs of the future and creating communities that are prosperous and positioned for growth, and we know that starts with supporting Queenslanders living in regional communities like Mackay with training and building potential for job opportunities,” she said.

“We recognise there is a skills shortage in the industry, so basing the Centre of Excellence in Mackay, where it is most needed, is great news for people seeking safe, accelerated training so they are better equipped to find work in Queensland’s mining sector.”

The centre will be delivered by Mackay Regional Council in partnership with the Resource Industry Network, with operational involvement from tertiary education providers.

The underground coal mine simulator will also be available for testing, demonstrating and filming new equipment and products operating in confined spaces, will enable new emergency response procedures to be practiced and refined, and will allow tourists to experience what it is like working in an underground coal mine.

The centre will support three new full-time jobs in management and scientific research roles, and once operational, staff will begin to map actual test mine sites, so that the simulator will be able to replicate physical conditions so that testing can be in real or close-to-real conditions, as opposed to laboratory-based conditions.

Realm Resources Foxleigh Mine Complex makes good progress in June quarter Realm Resources Limited Foxleigh Mine Complex achieved several mine operational records during the June 2018 Quarter, including drilled metres, blasted volume and total material movement.

The Company said in its quarterly report that the most notable record was the 4.5mbcm of waste moved in May, beating the previous record set earlier in the quarter in April by more than 10%.

“Excellent performance in relation to material movement was achieved in the Quarter with production from three pits - Foxleigh Plains, One Tree West and Fox Plains North. First coal was mined from Foxleigh Plains North in May,” Realm Resources said.

“Good progress in overburden movement continued in One Tree West to have this pit positioned well at the end of the quarter to deliver large volumes of run of mine coal in Q3 as forecast. Fox Plains North achieved coal into the washplant within 6 weeks from the first overburden bucket, albeit associated oxidisation in near surface coal contributed to lower yields.”

Sales were 9% down on the previous quarter largely related to forecast ships being delayed into Q3 due to co-shippers not having available coal to meet their commitments. Year to date sales of 1.57Mt are in line with budget.

Foxleigh Mine is yet to finalise pricing with all customers for the June quarter. Pricing is expected to be lower than Q1 pricing reflecting some softening in overall market conditions for metallurgical coal during the June quarter period.

Overall exploration drilling is progressing ahead of schedule primarily due to favourable weather.

METS sector allocated $1.8 million to support innovation and jobs growth The Queensland Government has allocated $1.8 million in 2018-19 to encourage innovation and jobs growth in the state’s $7 billion Mining Equipment, Technology and Services (METS) sector.

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Minister for State Development, Manufacturing, Infrastructure and Planning Cameron Dick said that the Palaszczuk Government funding would deliver 11 state-based industry support activities during the year in partnership with METS Ignited, one of six Australian Government-led growth centres.

“The METS sector employs about 20,000 people in Queensland and these new activities are key to achieving our plan to create a further 3000 extra jobs over the next decade,” Mr. Dick said.

“Activities in 2018-19 include another round of the Igniting METS Accelerator programme following the Igniting METS Accelerator pilot’s success in 2017.”

“Another Accelerator in 2018-19 will help start-ups and early stage companies with great innovations to take their products and services to national and international markets.”

Mr. Dick said that a series of Mini Accelerators would also be run to reach Queensland companies in regions where they may not be able to access the full accelerator programme.

“A Scale-Up and Take Off programme is being developed to assist METS businesses who are expanding to meet the challenges that come with growth,” he said.

Other METS activities for 2018-19 include: • a series of workshops in major centres across Queensland to increase awareness of growth opportunities in the METS sector • a programme to improve digital capabilities • funding for the Coalition for Energy Efficient Comminution (CEEC) to identify and promote opportunities for Queensland METS companies to develop and supply energy efficient and commercially valuable solutions to the energy and resources industry • continued support for the Test Facilities Research Project to determine gaps in existing test facility availability in Australia, supporting METS businesses to trial new ideas in a practical environment.

According to Mr. Dick, many of the activities in the upcoming work programme are key actions from the Palaszczuk Government’s $7 million METS programme, including the Queensland METS 10-Year Roadmap and Action Plan, released in July last year, which, Dr Dick said is part of the Government's $650 million Advance Queensland initiative to create knowledge-based jobs for Queenslanders.

Proposed restrictions on use of labour hire a backward step - MCA Minerals Council of Australia (MCA) Chief Executive, Tania Constable has said that the Federal Opposition’s proposed restrictions on the use of labour hire in Australian workplaces would be a backward step for employers and workers, inhibiting workplace flexibility and reducing job opportunities, according to

Ms. Constable said that the plan is deeply flawed, based on false premises and would negatively impact Australia’s economy.

“Instead of tackling the rigidities in the workplace relations system which are prompting many businesses to use labour hire, it would only introduce new inflexibilities into working arrangements and cost jobs,” she said.

“Australia’s mining and mining services sectors support 1.1 million jobs and contribute 15 per cent of GDP.”

“Labor’s plan will erode Australian mining’s international competitiveness and act as a barrier to introducing new ways of working and new technologies and skills and that will be bad news for investment and productivity in the mining industry and will undermine the industry’s ability to continue creating well-paid and highly-skilled new jobs into the future.” 26 July 2018 Hunter Valley Coal Report No 29/18 10

“Labour hire workers in the resources sector are generally highly paid and highly skilled and are protected by the same rigorous health and safety laws as other mining workers.”

“Average annual earnings in the mining industry are about $140,000, the highest of any industry in Australia and more than 60 per cent higher than the national average.”

“Over the last decade, the Australian mining industry has delivered average annual wages growth of 5 per cent, well above the national rate of wages growth over this period.”

“By eroding competitiveness, Labor’s plan will jeopardise the industry’s ability to continue paying high wages to attract and reward the skilled workers it needs to take advantage of future growth opportunities. It will also hurt the many regionally-based small and medium sized businesses and contractors servicing the mining industry,” Ms. Constable said.

“The MCA notes that the Opposition intends to consult with business about the implementation of the policy. We will make strong representations to the Opposition about the many flaws in its plan and the need to rebalance the existing imbalanced federal workplace relations system.”

“The MCA has already proposed a set of modest reforms to make the workplace relations system more flexible. These reforms will maintain the fairness of the system while avoiding heavy-handed regulation which puts jobs and investment at risk.”

Company News – Atrum Coal, Centurion Transport, CIMIC Group, South Maitland Railways, Tigers Realm Coal Atrum Coal Limited has announced completion of first phase drilling which commenced at the Elan South Exploration Programme on 25 June 2018. The Company said that coal samples from drill cuttings have been sent to an independent laboratory for testing. “Modelling and interpretation are under way to refine drill targets for the next phase of the programme which will resume in the coming weeks,” Atrum Coal said. Drilling is aimed to be completed in mid September. Elan South forms part of the Elan Coking Coal Project in southwest Alberta, Canada.

Centurion Transport Pty Limited has been selected by Anglo American as its preferred tenderer for the provision of general transport services for all of its operations throughout the Bowen Basin in Queensland, including its five coal mines in a five year contract. Centurion said that the contract has generated a significant number of jobs, mainly in Mackay, as well as a platform for further growth for the company. “As part of the contract, Centurion is operating major freight consolidation facilities in , Mackay and Rockhampton along with direct linehaul services to Anglo American sites,” the Company said. Centurion’s Chief Executive Justin Cardaci said, “Centurion has a long and extensive history of providing safe and reliable supply chain solutions to customers operating in the mining industry.” “Our offering is based on a very well developed mining support solution which has safety at the core and provides visibility tools tailored to client requirements that enable logistics management to be performed in a controlled manner throughout the entire process. “This not only enables planning and scheduling to be more precise but also allows operators to remove working capital that is in place to buffer supply chain unknowns.”

CIMIC Group Limited has reported increased revenue and cash-backed profit for the six months to 30 June 2018, continuing its focus on delivering sustainable returns. Highlights of the result compared with HY17 include significant growth in NPAT, up 12% to $363 million, solid revenue growth across all Operating Companies, up 11% to $6.9 billion and a robust order book with work in hand of $34.8 billion, Operating Companies’ work in hand is up $2.1 billion. CIMIC Group announced several important projects in Australia and abroad during the June 2018 quarter including a $830 million in contract extensions at the QCoal Northern Hub, Dawson South and Curragh coal mines in Queensland. 26 July 2018 Hunter Valley Coal Report No 29/18 11

South Maitland Railways (SMR) is to hold a two day event on the 8 and 9 December 2018 to celebrate the 125 year anniversary of the running of the first train (09 December 1893) and the 100 year anniversary of the incorporation of South Maitland Railways Limited (22 November 1918). The event, to be held at the East Great Junction Yard (EGJ) in Telarah will include displays of past and present rolling stock, all things rail and the running of the No. 18 steam locomotives. Heritage passenger trains will convey patrons to the EGJ yard throughout the event. SMR has had a long standing relationship with the mining industry, servicing the South Maitland Coalfields since 1893. In the 1920’s, SMR was NSW single most important energy conduit with 46% of all the coal produced passing over its line destined for both local and overseas markets. SMR was purchased from Coal & Allied in the late 1980’s by prominent coal industry stalwarts Brian Marheine (Wambo and Mt Owen) and the late John Horseman (Coal and Allied and Mt Owen). It continues to be run by the families of these men. . Proceeds of the event will go to the continued repair and running of the iconic No. 10 and No. 18 steam locomotives owned the Hunter Valley Training Company.

Tigers Realm Coal Limited (TIG) mined 104.4kt run of mine coal from its Project F Phase One Operations in Far Eastern Russia during the June 2018 quarter. The Company said that coal mining and haulage did not meet its Q2 2018 guidance of between 115 to 130kt, monthly production being 40.7kt, 25.3kt and 38.4kt of coal in April, May and June respectively. TIG loaded 28.9kt of coal by 30 June and completed loading of the first 44kt shipment in the first week of July. In addition to this, the port received 1,332 tonnes of general cargo and shipped 14kt of third party coal for the June quarter. During the quarter, TIG continued its exploration programme at Amaam with 229m drilled into the Area 4 South Syncline target. Drilling is planned to continue in this area and at Amaam North during the 2018/2019 Russian winter. Other licencing works during the June quarter primarily focussed on documentary compliance works. During June 2018, TIG achieved a key milestone aimed to provide long-term tenure for Project F’s mining and sales activities by obtaining a “Discovery Certificate” for the Zvonky deposit located in the eastern extension along strike of Project F. TIG said that this paves the way for the conversion of the Zvonky deposit to an Extraction and Exploration Licence (Mining Licence).

Safety Weekly Incident Summary 2018 Source: NSW Government

View the Weekly Incident Summary here

Falling coal hits two workers in underground mine A father and son suffered serious injuries while working in an underground coal mine on 4 July 2018.

Falling coal rib struck two workers in the underground workings of the mine when the strata failed on 4 July 2018. One of the workers suffered serious injuries. The NSW Resources Regulator has commenced an investigation to determine the cause and circumstances of the incident.

At 9.10 am on Wednesday 4 July 2018, a section of the right rib of the heading failed (rib spall) in 808 North Panel and struck two mine workers, a father and son.

The continuous miner driver, the father, aged 55, suffered two fractures to his left femur (upper leg). He also suffered abrasions and soft tissue injuries to his right ankle and right arm. The cable hand, the son, aged 26, was struck by the falling coal and sustained abrasion and soft tissues injuries to his upper back and a suspected neck injury.

The injured workers were transported by helicopter to Westmead and Liverpool hospitals.

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Failure of right rib in underground heading. Picture by Resources Regulator investigators.

Serious injuries at an underground coal mine A flying object hit a worker and inflicted a serious injury while he was attempting to free a jammed conveyor chain of a continuous miner in the underground workings of the mine on 5 July 2018. The NSW Resources Regulator has commenced an investigation to determine the cause and circumstances of the incident.

At 4.50 pm on Thursday 5 July 2018, a flying object struck a worker when it was ejected from the rear conveyor of a continuous miner. The object struck the continuous miner driver, aged 46, in the face, rendered him momentarily unconscious and knocked him over with his head hitting the mine floor. The worker was transported by ambulance to Orange Hospital for treatment.

The worker received more than 50 stitches for a facial wound and one stitch to a small laceration near the corner of his left eye. He was released from hospital on Friday 6 July 2018.

Continuous miner in underground heading showing conveyor. Picture by Resources Regulator investigators.

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Diary Dates 25-27 Jul AusIMM The Life-of-Mine Conference 2018 2018 Brisbane QLD

27 Jul 2018 Hunter Research Foundation Centre – Hunter Economic Breakfast

06–08 Aug NSW Mining HSEC Conference & Awards Dinner 2018

16-17 Aug Informa – Australian Coal Conference 2018 Radisson Blu Plaza Hotel Sydney NSW www.informa.com.au/coal18

19-22 Aug Queensland Mining Industry Health and Safety Conference 2018 2018

24 Aug Hunter Business Mining 2018

10-11 Sept AusIMM Global Mining Leaders 2018 2018 Perth WA

11–14 Sept ACPS 17th Conference & Exhibition 2018 2018 Royal International Convention Centre Brisbane QLD www.acps.com.au/conference-2018/

19 Sept Queensland Miners Memorial Day 2018

26-27 Sept NSW Resources Regulator Mechanical Engineering Safety Seminar 2018 2018 Sofitel Wentworth Sydney NSW 26 July 2018 Hunter Valley Coal Report No 29/18 14

22-25 Oct 14th International Conference on Greenhouse Gas Control Technologies 2018 Melbourne Convention Centre VIC 29 Oct – 01 5th International Mining and Resources Conference (IMARC) 2018 Nov 2018

31 Oct – 01 Informa - Longwall 2018 Nov 2018 Crowne Plaza Hunter Valley NSW

07-08 Nov Electrical Engineering Safety Seminar 2018 Sofitel Wentworth Sydney NSW 28-30 Nov AusRock–The Fourth Australasian Ground Control in Mining Conference 2018 Sydney NSW

14 Dec 2018 Coal Services Western Region First Aid Competition 2018 Moolarben Mines Rescue Station Ulan NSW 18-20 Feb University of Wollongong Coal2019 Conference 2018

Personnel Vale – Roy Simpson Roy Simpson, a longtime member of the Mine Managers Association of Australia passed away on 18 July 2018 at Dubbo hospital. Mr. Simpson gained his Manager’s certificate in England and emigrated to Australia in the 1970’s. He was appointed as an Undermanager at Chain Valley Colliery before moving to Gunnedah as Mine Manager at Preston Colliery. Mr. Simpson retired as General Manager of Gunnedah Collieries in the late 1990’s and moved to Cobar some 10 years ago.

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TransCoal Port Congestion Graph - East Coast Australia 23 July 2018 - The overall vessel queue decreased from 72 ships last week to 62 this week. Queensland’s queue increased from 53 ships last week to 55 this week. queue decreased from 19 ships last week to 9 this week.

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HVCCC Weekly Performance Report Report for 16 - 22 July 2018 Source: Hunter Valley Coal Chain Co-ordinator (HVCCC)

Coal Delivery • Planned rates were 108kt below target while Actual inbound performance was 261kt below the Declared Inbound Throughput (DIT). Total losses finished the week at 12.4% compared to the 2018 declared target of 8.3%. • July month-to-date throughput is currently 10,844kt (179.9Mtpa) which is 837kt below the DIT, with total losses of 11.8%.

Shiploading - Port Waratah Only • Planned rates were 53kt above target while Actual outbound performance was 292kt above the Declared Outbound Throughput (DOT). July month-to-date shiploading is currently 7,852kt (130.3Mtpa), 536kt below the DOT. • Port Waratah port stocks finished the week at 1,681kt, a decrease of 578kt from the previous week.

Coal Chain Demand • July nominations at Port Waratah are currently 9.7Mt. • Based on terminal demand the Port Waratah vessel queue is estimated to be five at the end of July and less than five at the end of August. • At Port Waratah, there were nine vessels in the offshore queue at the end of the week.

Braemar ACM Weekly Scope 24 July 2018

Far East Mediterranean/Continent Australian Round Voyage Vessel Mediterranean/Continent Far East DWT Last This Last This Last This Change Change Change Week Week Week Week Week Week 28,000 $8,000 $8,000 $0 $5,250 $5,250 $0 32,000 $8,750 $8,750 $0 $6,000 $6,000 $0 58,000 $11,000 $11,000 $0 $6,750 $6,750 $0 $18,000 $18,900 $900 74,000 $9,917 $9,635 -$282 $5,088 $5,037 -$51 $20,614 $20,922 $308 180,000 $21,178 $22,431 $953 $8,381 $8,512 $131 $43,011 $43,292 $281 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 8,950 8,750 52,000 13,000 11,500 74,000 9,800 10,000 180,000 19,000 21,000

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CAPESIZE An active start of the week in the Pacific. Overnight fixtures are reported at $9.30/tonne to $9.50/tonne levels compared to $8.60/tonne to $9.00/tonne levels reported end last week. From overnight and morning activities, charterers are seen holding off their bids, offers are seen at $10.00/tonne to $10.20/tonne levels and some fixtures are reported done at $9.85/tonne. On TCE, there is now a premium on C5 over C3 route. As such we may see move tonnage staying in the Pacific.

A quiet start of the week on C3. Minimal fixtures are reported overnight. From overnight and morning activities, bids are seen at $22.60/tonne to $22.80/tonne levels while offers are seen at $23.25/tonne to $23.50/tonne level basis first half August dates. Some operators are seen withdrawing their enquiry and decided to sell instead. More activities can be expected later in the week, when the spread narrows.

PANAMAX The Panamax market was sluggish with few fixtures emerging. Market sentiment turned on Tuesday due to the firm market in Atlantic. In the Pacific region, a Transpacific round voyage is now priced at around mid to low $10,000/day. Australian round voyages were reportedly done at low $10,000/day levels with a good LME Kamsarmax open in North China. Indonesia to South China remained soft at mid to low $9,000/day with vessels delivery South China. NoPac rates also suffered without healthy amount of cargoes shown in the market. Fixing levels slipped to mid to low $11,000/day levels for LME types opening Japan to South Korea range and a slight premium for Kamsarmax and prompt cargo orders. Rates in the Atlantic took off as a combination of a reduced tonnage supply in the North coupled with increased mineral Transatlantic trades and several front haul stems from various alternative loading areas to East Coast South America fuelled the bull's optimism. East Coast South America has been comparatively slow last week with rates remaining flat at around $16,000/day plus $600,000 ballast bonus for Kamsarmax. Short period interest was also weak as not many fixtures to be reported while owners are still aiming at a high level of $13,000/day for LME for about 4-6 months.

HANDYSIZE, HANDYMAX & SUPRAMAX In the Supramax market there are many vessels delayed in the Far East due to Tropical weather depressions therefore hire rates in the Far East are relatively weak. In the NoPac Ultramaxes are being rated at just below $11,000/day. There has been an influx of end July and early August Indonesia coal export for both China and India bound thus seeing a steady rise in rates, with a Pacific round voyage worth around the mid $10,000/day levels on dolphin 56,000dwt ships.

Period rates are holding firm at $11,000/day to $12,000/day region on Supramax depending on description and trading flexibility. Still the market has a lot of room to pick up from the recent bearish run.

The Handysize Pacific market started the week on a flat note in the Pacific and activity since last week has been thin. There has been quite a build-up of tonnage in Far East and South East Asia which is keeping pressure on rates. The Australian coast is seeing a bit more cargo this week compared to the last couple of weeks. In South East Asia, 28,000dwt ships rates are at $8,000/day for an Australian round voyages ex Singapore and 38,000dwt ships are still around $10,000/day for the same. In North Asia, 28,000dwt ships are still around $8,000/day for trips to South East Asia and 38,000dwt ships are around low $9,000/day now for trips South.

Commodities (USD) Coal (Del. China) Ther. Newc.6.3k Change Ther. Kalim. 5k Change Cok.Prem.Oz Change $199.95 $80.95 $66.00 -$1.30 $175.75 -$6.25

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Bunkers (USD) Port 380 IFO Change 180IFO Change MDO Change Singapore $462.00 -$2.00 $471.00 -$2.00 $624.00 -$5.00 Hong Kong $470.00 $7.00 $479.00 $7.00 $650.00 $1.00 Japan $470.00 -$9.00 $479.00 -$9.00 $594.00 $7.00 Sth Korea $476.00 -$5.00 $496.00 -$5.00 $669.00 $7.00 Bunkers at 23 July 2018 (Source: Universal Bunkering Pty Ltd).

Indices Date 16 Jul 16 Jul Change BHSI 560 559 1 BSI 1,028 998 30 BPI 1,556 1,529 37 BCI 14 3,304 3,238 66 BDI 1,718 1,695 23 At 23 July 2018 (Source: Baltic Exchange)

DRY CARGO / BRAEMAR ACM Event Impact Analysis - 20 July 2018 Higher coal imports reported into China in first six months • Coal imports into China for the first half of this year were reported at 146 million tonnes • The Customs data showed this was the highest level for three years • The imports represented a growth of 10 per cent compared with last year • June was particularly strong at 26 million tonnes, up 18 per cent compared with June 2017 • Domestic supply restrictions driven by ongoing safety and environmental checks at major coal mines were partly responsible for the strong figures • Strong seasonal demand due to summer electricity demand also contributed.

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