Australia’s Whitehaven Coal delays decision on $700 million mine expansion as sales slump.

Whitehaven Coal shares slumped on Thursday after the miner downgraded its coal sales target for the second time in five months and ruled out investments in coal mine expansions this year amid turbulent financial markets

The freeze on expansion decisions has most relevance for the $700 million Vickery project near Gunnedah in New South Wales, which was expected to be the subject of an investment decision in 2020.

But the project continues to be held up in NSW approval processes, and Whitehaven said on Thursday it would be cautious amid the recent market turbulence, even though the coronavirus had not affected its business to any significant degree.

The comments come after Whitehaven’s half year profits in February were 91 per cent lower than in the previous comparable period, on lower coal prices and lower sales volumes. Whitehaven also reported in February that its net debt had more than tripled.

Whitehaven had originally hoped to sell between 20 million and 21 million tonnes in fiscal 2020, but was forced to downgrade both its coal sales and coal production targets in December after disruption from drought, bushfires and staffing problems. The company said on Thursday it would not achieve its downgraded coal sales target of between 19 million and 20 million tonnes, telling the market it would now sell between 17.5 million and 18.5 million tonnes in the year to June 30.

The new target suggests Whitehaven will sell between 14 per cent and 19 per cent less coal than last year, and it looms as Whitehaven’s weakest year of coal sales since 2015.

[Peter Ker]

16 April  2020

IEEFA