12 April 2017

March 2017 Quarterly Report – Production on target

March 2017 Quarterly Report

Highlights

Strong safety performance – TRIFR 8.6 at the end of March
Record managed quarterly ROM coal production 5.7Mt
Managed quarterly saleable coal production 5.1Mt
Managed quarterly coal sales 4.9Mt
Maules Creek operating at 10.5Mtpa rate during the quarter
Near record production of 1.7Mt ROM coal and railings from the Gunnedah open cuts and CHPP
Longwall changeout at Narrabri near completion with production due to recommence next week
Vickery EIS to be lodged with the NSW Government authorities before the end of the June quarter

Managed Production and Sales Highlights

Managed coal sales in the March quarter were 4.9Mt, excluding sales of purchased coal. The level of sales was as expected as production from Narrabri was impacted by the scheduled longwall changeout. Equity coal sales (excluding purchased coal) in the March quarter were 3.6Mt comprising 64% high CV thermal, 22% metallurgical coal and 14% low CV thermal coal. The sales mix for the quarter was influenced by higher than usual volume of low CV coal sales from Werris Creek compared to the first half of the year when low CV sales made up 8% of total sales.

Against a backdrop of supply/demand tightness promoted by Chinese production reform, strong demand for metallurgical coal by steelmakers during the December quarter, coupled with an anticipation of weather related disruptions in Australia, pushed metallurgical coal prices higher. Subsequent to the calendar year-end and with a relaxation of Chinese supply restraint driving metallurgical coal production, demand for metallurgical coal fell and spot prices weakened considerably.

Following the impact of Cyclone Debbie, enquiries for metallurgical coal have increased substantially. Given existing committed sales volumes, we are expecting an increase in metallurgical coal sales in the final quarter of the year.