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Whitehaven Coal Limited : Annual Report 2013
As widely reported the start of construction was delayed by a legal challenge brought by a group with funding from the Environmental Defenders O ce. Construction activity can now commence when contracts are let and salvage works by indigenous groups are completed. The project has been through one of the most rigorous planning approvals processes ever undertaken by a mine in New South Wales and has been reviewed by a wide range of highly regarded environmental experts. We are con dent that the management plans that are being put in place provide a solid foundation for the operation's ongoing sustainability. Pleasingly, despite the suspension of mining at the Sunnyside open cut, overall open cut coal production exceeded the previous year's production. Werris Creek was able to lift its ROM coal production by 32% and total open cut production increased by 9% for ROM coal and 5% for saleable coal production to 5.4Mt and 4.7Mt respectively. As part of a cost reduction programme during the year the mine plans for each of the open cuts were reviewed and the strip ratio e ectively reduced for the next two years. This change has led to a reduction of the number of trucks required for overburden removal and lowering costs for those two years. In another measure aimed at reducing costs and running the business more e ciently a shared services function has been established along with the appointment of a group procurement manager. These administrative changes are required as the Company progresses through its strong growth phase that will occur over the next three years. Whitehaven's current agship mine, the Narrabri underground coal mine, performed impressively during its rst year of longwall production, especially since the mine is still in the ramp up phase. Production from the longwall commenced just prior to the beginning of the year and achieved a total of 3.7Mt ROM coal (100% basis) for the full year. Saleable coal production on the same basis was 3.5Mt. The relatively new workforce, which is now almost completely Whitehaven direct employees, has performed exceedingly well with safety improving as the year advanced and the rst longwall move being completed safely on time and budget in July 2013. Infrastructure From an infrastructure perspective Whitehaven was obliged to make take or pay payments to infrastructure providers during FY2013. The situation will persist into FY2014, albeit at lower charges following a reduction in the rates through the two major port facilities. For the longer term Whitehaven was able to negotiate a new rail haulage contract for up to 16Mtpa with Aurizon. The contract is structured for volumes to increase in line with the growing production. Outlook Whitehaven's longer-term aim is to become the premier independent listed coal company in Australia. The process commenced with the successful development and ramp up of production from the Narrabri underground coal mine and will continue from the construction and development of our second Tier 1 asset, the Maules Creek project. The outlook for the coal industry and coal prices remains subdued, although recent data from China does indicate that low prices are having an impact on production in that country with small producers cutting output. While the Company does not expect any improvement in coal prices in the short-term, the weaker Australian dollar will help to increase revenues in FY2014. Sales revenue will also be increased by having resolved the energy levels in the Narrabri thermal coal product as the coal will be sold at Newcastle bench mark prices in FY2014. We will remain focused on cost cutting across all of the mines which will leave Whitehaven well placed to cope in the current market environment. Conclusion I would like to thank our Board, management team and broader workforce for their e orts during what has been a di cult year for the Company and the coal industry generally. The opportunities for our people and our business are immense. Being involved in the green eld development of three major projects, Narrabri, Maules Creek and the longer-term Vickery project, is an opportunity both I, and others in our business have embraced, and valued -- despite the many challenges involved. These opportunities are also attracting excellent people to our business, ensuring that we will have the resources we need to continue to deliver. These developments will be transformational for Whitehaven and will underpin our goal of making Whitehaven the premier independent coal company in Australia. Paul Flynn Managing Director and Chief Executive O cer 7 Whitehaven Coal Limited Annual Report 2013 Managing Director's Report
Annual Report 2012