For the month of July, the Oaky No 1 mine produced 88,493 tonnes of run of mine coal – some 404,000t below its target.

Development rates at the mine were also lagging by 96m at 1854m.

It is believed the mine is still well below its targets since then.

A spokesperson for Xstrata Coal told ILN: “We hope these engineering issues will be resolved by the end of the year but we will not be providing more information on the issue at this time.”

Oaky Creek general manager Shane Hansen is quoted in the company newsletter as saying the new longwall at Oaky No 1 is an “area of concern”, as is the company’s safety record.

“There has been a number of commissioning issues and we are working closely with the supplier,” he said.

“Resolving these issues is likely to take some months and it will require patience and perseverance to rectify the problems.

“Therefore, the pressure remains on Oaky North to efficiently produce the tonnes to as low cost as possible.”

The company is also facing cost pressures with lower coal prices and the need to cut unnecessary spending, according to Hansen.

“We are heading towards a low point in the price cycle but we have a good business and good people and I have confidence we can face the challenges ahead,” he said.

“The world market for coal is changing rapidly. The price is slumping and customers are reluctant to buy coal in case they are unable to sell their product.

“This changes our focus from just efficiency and elimination of waste, to directing our attention to underlying production costs as well.”

The mine had already made budget cuts but there was further work to be done to strategically find ways to save more, which included no longer affording the “nice to haves”, he said.

“However, we can’t let these challenges distract us from safety on the job,” he added.

“All of the operations have not achieved their targets with reducing the number of injuries at work.”