The Coal Trader

Coal Mining News & Market Updates Whitehaven Coal

Whitehaven’s Paul Flynn says labour shortages have eased but wage inflation remains an issue

Whitehaven boss Paul Flynn says tight labour markets are easing on the east, but the company is still facing the pinch from rising wages as the company gears up output after taking control of BHP’s Daunia and Blackwater coking coal mines.

The coal miner has struggled to fill roles at its Maules Creek mine in particular in recent years, which hit production as coal prices peaked.

“The market definitely has eased up a bit, in the sense that labour is more freely available,” Mr Flynn told analysts on Friday.

“That doesn’t mean inflation is improving there, I have to say, but the people to put into equipment to make sure that it’s operational, that is more freely available.”

Mr Flynn’s comments come after Whitehaven abandoned a trial of autonomous trucks at the NSW mine, with the company citing the difficulty of safely running autonomous trucks in the same space as those with drivers.

“The challenge here is that this is a big mine from an output perspective, but in a relatively small footprint,” he said.

“The productivity penalty that would have imposed on us was just unpalatable.”

Mr Flynn told analysts the company had not abandoned the idea of using autonomous trucks, which dominate Pilbara iron ore mines and have led to significant productivity improvements in the iron ore industry.

The Daunia mine Whitehaven acquired from BHP is fully autonomous, and Mr Flynn said the company was still considering how it could expand the system used in the Queensland coking coal mine across its other operations.

Whitehaven says it is gearing up to “significantly benefit” from the long term metallurgical coal market dynamics through the Daunia and Blackwater mines from BHP, which will start to contribute to earnings in the June quarter.

It comes after a weak March quarterly result, compared to the previous quarter. Whitehaven produced 4.4 million tonnes of run of mine production – down 13 per cent than the December result – with Maules Creek and the Gunnedah Open Cut mines continuing to deliver strong operational performance.

But production at Narrabri was lower than expected reflecting the geological challenges and associated equipment reliability and maintenance stoppages, Whitehaven said.

The Queensland Daunia and Blackwater mines are expected to deliver around 4.5 to 5 million tonnes of mine production in the first quarter of Whitehaven’s ownership, with the group currently on track to meet overall guidance of 18.2 million to 20.7 million tonnes from its NSW business.

Year to date ROM production of 14.7 million tonnes – 12 per cent above prior year comparison.

March quarter managed sales of produced coal of 3.8 million tonnes is 16 per cent lower and total equity sales of produced coal of 3.1 millon tonnes is also a 16 per cent decline.

Whitehaven is targeting managed coal sales of 16 to 17.5 million tonnes for the full financial year.

The company realised an average coal price $219 a tonne of coal across its operations for the quarter, Whitehaven said, up slightly from the $216 a tonne in the December period.

That included an average $US136 a tonne for its thermal coal, an 8 per cent premium to benchmark spot prices sold through the Newcastle coal terminal.

Whitehaven shares were up 3.5c to $7.915 at 1430 AEST.