In its half-yearly report the company said commissioning delays and a capital overrun of about $65 million had been revealed in an audit the company undertook in January. Excel has since taken control of the project from the contractor, Australian Coal Technology, and is still hoping for plant commissioning at the end of May.

In a frank post-mortem Excel said the problems at the project stemmed from a trade-off between speedy development and slowing the process to ensure Australian Coal Technology was on top of the issues.

“When Excel acquired Millennium in late 2004, the CHPP [coal handling and preparation plant] contract was in progress. There was significant competition for skills and material. Any delay would have risked losing our place in the development queue,” Excel said in its half-yearly presentation.

While due diligence indicated the contractor had performed satisfactorily, Excel said it was now evident the contractor did not have the appropriate skills to manage the job to completion.

The blowouts have driven down Excel Coal’s full-year profit guidance to a net profit prediction of $95-100 million.

Mining at Millennium started on time in November but water supply is an issue for the mine, as it is for all Bowen Basin miners.

The company benefited from higher coking and thermal coal prices with results for the half year showing a net profit of $A52.9 million, up 116% on the previous period. EBITDA was up 70% to $96.3 million enabling the company to declare a dividend of 13c per share.

Excel said the Wambo opencut operation was performing well, up 17% with 1.7 million tonnes saleable coal produced in the six-month period. The ramp-up to 4Mtpa saleable coal has progressed ahead of the commissioning of the new PC 5500 excavator and six Komatsu 930E trucks.

Development of the North Wambo underground was on track with Excel reporting favourable mining conditions. The company has ordered a Joy 250m wide longwall and two continuous miners due for February and March delivery. The longwall is to be delivered in December with production to start in early 2007.

A longwall move dropped output from the Metropolitan longwall mine by 14% to 700,000t for the first half. Excel said the mine was experiencing ongoing cost pressures related to steel, power and supplies.

Minor dykes encountered in the existing longwall panel, while anticipated, are having a slight effect on productivity.

Following finalisation of mining leases, site construction at Excel’s opencut Wilpinjong mine project near Mudgee in NSW has begun under contractor Thiess. The project is expected to produce 13 million ROM tonnes beginning January 2007.

The company said it was still in negotiations to set prices for its coking and thermal coal.