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Whitehaven Coal Limited : Annual Report 2008
Whitehaven Coal Limited - Annual Report 2008 Tarrawonga has had 18ha subject to rehabilitation treatment with some 2,000 seedlings planted to facilitate woodland establishment. Our strong community links are also being maintained with the local Aboriginal community and other community groups through their involvement in our rehabilitation program. Whitehaven maintains a plant propagation unit in conjunction with Red Chief Local Aboriginal Land Council to propagate seed collected from on and surrounding our project sites, and also utilises the services of Red Chief Local Aboriginal Land Council and Gunnedah West Rotary Club for tube-stock planting campaigns. The Soil Conservation Service (Dept of Lands), which is recognised as the lead experts in soil conservation and erosion control, is involved in the design and development of drainage structures on Whitehaven’s rehabilitated areas. Whitehaven’s environmental programs during the current year include ongoing rehabilitation at our Canyon and Tarrawonga sites, preliminary rehabilitation work at Rocglen, Narrabri and Sunnyside Operations and finalisation of a regional biodiversity offset proposal currently under consideration through the Department of Planning and Department of Environment and Climate Change. This offset proposal offers up to 1,000ha of relatively undisturbed woodland in a regional corridor context as offset for the areas disturbed by our mining activities. COAL PRICES AND FOREIGN EXCHANGE The medium term demand for thermal and PCI coal remains strong and is reflected in the higher US$ contract prices achieved for Whitehaven’s products in FY 2009. The company has entered into new coal sales contracts with steel industry users for approximately 1.0 million tonnes per year of semi-soft coking coal (SSCC) and pulverised coal injection (PCI) coal for the next three years. These contracts will be supplied at prevailing market prices, fixed annually. The average sales price secured for FY 2009 under these contracts is A$250 per tonne FOB. Whitehaven has also secured approximately 0.6 Mt of new thermal coal contracts for FY 2009 at an average price of approximately A$135 per tonne FOB. These new contracts are with prime customers in the major Asian markets and will further underpin our significant production growth in the Gunnedah region. The Whitehaven foreign exchange risk management policy is to hedge US$ revenue using Forward Exchange Contracts (FEC) where the volume and price are fixed. At June 30, 2008 Whitehaven had US$411.7M in FECs at an effective rate of A$1:00 = US$0.8298. OUTLOOK Managed production will increase in FY 2009 with production improvements at Tarrawonga and Werris Creek and commissioning of the new Rocglen and Sunnyside open cut mines replacing Canyon, which is at the end of its reserves. However, shipping allocation is yet to be granted for calendar 2009 to Whitehaven at the existing Newcastle coal terminal and this will be critical to achieving Whitehaven’s planned increase in sales. Our strategy to maximise conversion of thermal coal to PCI to maximise supply to higher value markets will continue, consistent with commitments to previously contracted sales. I would like to thank our employees for their commitment and contribution during the year and the Directors for their confidence in my appointment and for their support. I pay tribute to Keith Ross who resigned as Managing Director in March for his vision and commitment in getting Whitehaven to where it is today. Rob Stewart Managing Director 11
Annual Report 2009