Whitehaven Coal to build houses to attract workers to its mines after record $2bn profit; expects coal prices to stay strong
Despite record prices and profits, Whitehaven Coal is struggling to attract workers to its mines – so much so the group will develop new houses to attract workers.
Whitehaven Coal boss Paul Flynn has warned critical shortages of labour in the NSW coal sector could again hit output from the company’s mines, as it returns rivers of cash to shareholders on the back of record prices.
The company will pay a 40c a share dividend after booking a record $2bn annual net profit, with the Australian coal major saying it expects thermal coal prices to stay high for some time.
Whitehaven said it is looking to sell as much coal as possible into thermal coal markets while prices remain high, and flagged an improved operational performance for the current year.
The group sold 17.6 million tonnes of coal last financial year, and said it expected to sell 17.5 to 18.5 million tonnes in the current year.
But Mr Flynn warned on Thursday that Whitehaven’s production targets could still be at risk from labour shortages affecting the Australian mining sector, as the company struggles to recruit and retain skilled workers at its mines.
“We’re seeing shortages across all levels and skills, and we’re even contemplating fly in, fly out trades people at our business – which we hope is a temporary thing, but you’ve got to compete for the talent you need,” Mr Flynn told The Australian.
The competition for workers is so fierce in the NSW coal sector that Whitehaven is even considering buying and developing land in regional areas around its four mines in the Gunnedah region of NSW.
Mr Flynn said the company had set aside about $17m to acquire and develop land, with the company planning to make some lots available to current employees and their families, and for people considering working for the company. Other lots would be sold on, to increase the housing stock in the region, he said.
“We have grown considerably over the last 10 years and, as a local employer, we are taking a lot of the available housing capacity. We want people to move into the area, put down roots and bring their families and bolster these communities,” he said.
“We think there’s a role for us to stimulate further development in that regard. We have identified some areas and have purchased some land capable of subdivision, and we will be making blocks available – not just for our own people, but we will be recycling some of that investment by selling blocks on market to increase the housing supply in the community more generally.”
Whitehaven joined other mining companies in warning of rising costs, saying it expected average production costs to rise by as much as 14 per cent in the current year. The company said it expected its average output costs to average in the range of $89 to $96 a tonne this year, up from $84 a tonne last year.
Whitehaven booked earnings before interest, tax depreciation and amortisation of $3.1bn, up from $204.5m the previous financial year when Whitehaven received an average of only $95 a tonne for its coal sales.
Last financial year, the company was paid an average $325 a tonne for its coal.
Whitehaven said it had delivered its record profit on revenue of $4.9bn.
Mr Flynn said the company expected thermal coal prices to remain at elevated levels as European sanctions on Russian coal take effect this month, and because of disruptions to coal mines in the NSW Hunter Valley in July caused by bad weather,
“The longer-term under-investment in energy sources needed to supply baseload capacity to growing populations and economies has contributed to a widening gap between supply and demand,” Mr Flynn said.
“Coal prices are at record levels and customers are focused on energy security now more than ever before”.
Whitehaven repaid all of its bank debt during the year, and said it held $1bn in cash at June 30.
In addition to its 40c a share final dividend, now fully franked, Whitehaven said it expects to complete its $550m on-market buyback shortly, with the company planning to ask shareholders for approval to extend its buyback program at the company’s November annual meeting.
Whitehaven shares closed 1.4 per cent lower at $7.79 on Thursday.
