Whitehaven Coal cuts production guidance as drought hits; shares slump 10pc
Shares in miner Whitehaven sink as the company blames drought and savage dust storms for disrupting operations.
Shares in Whitehaven Coal plunged on Thursday after the company cut production guidance at its Maules Creek mine, blaming a tightening labour market and the savage NSW drought.
Whitehaven shares took a pummelling on the news, down 27c, or 9 per cent, in early trading, after it cut guidance at Maules Creek, its biggest mine, by 1.5-2 million tonnes of coal, to 10-11 million tonnes, from earlier forecasts of 12-12.5 million tonnes. The stock was one of the worst performers on the market, finishing down 10 per cent to $2.69 on Thursday.
It said coal sales would likely fall by a million tonnes, to 19-20 million tonnes, with costs across its operations up sharply, from an average $70 a tonne, to between $73/t and $75/t.
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The company said a “shortfall in experienced personnel” around the mine in northern NSW has made it difficult to fill the cabs in its haul trucks and diggers, leading to “unanticipated productivity losses”, and it is looking to fill the gaps with labour hire workers.
“Whitehaven expects it could take the balance of the financial year to source, select, on-board and train the necessary workers at Maules Creek in order to achieve a return to full utilisation of equipment and increase related operating productivity,” the company said.
The company said bushfires and the savage drought had also hit production in November, causing unscheduled stoppages as its haul truck drivers could not see where they were going.
Smoke, dust and haze events
“Production at Maules Creek has also been affected by numerous unscheduled production stoppages during November and December from smoke, dust and haze events, which are a function of ongoing severe drought conditions. With safety a key consideration, this has led to reduced truck speeds in lower visibility environments and in some cases required operations to be temporarily suspended,” the company said.
“As a 24/7 operation still to achieve 100 per cent in-pit dumping, Maules Creek has been disproportionately affected by these conditions relative to our other open cut operations which have shorter haul distances. The guidance incorporates an expectation of further disruptions during the summer months.”
While Maules Creek said it did not expect drought-related water shortages to impact production, it could not rule out further impact down the track.
“Drought continues to place significant pressure on many businesses right across NSW and Whitehaven is not immune to its impacts. Currently, no interruption is expected for financial year 2020 operations on account of water supply issues, but the company will update the market in the event regulatory delays around further water supply augmentation measures already in train impact this revised guidance,” it said.