Queensland Coal unit cash costs increased 8% to $60 per tonne as a result of lower sales volumes due to the impacts of Cyclone Debbie and a stronger Australian dollar. 

In the 2018 financial year, unit costs are expected to be $59/t, which includes additional contractor stripping fleet costs given forecast higher strip ratios and planned debottlenecking activities.

BHP’s NSW Energy unit costs of $41/t were in line with the prior year as a reduction in labour costs and favourable inventory movements were offset by a stronger Australian dollar.

Unit costs are expected to increase to approximately $46/t in the 2018 financial year as mining progresses through geological constraints [the monocline], strip ratios rise and pit design initiatives are implemented to reduce costs in future periods. 

These initiatives are expected to mitigate the impacts of the monocline and reduce unit costs from the 2020 financial year onwards, according to the company.

BHP said metallurgical coal prices increased significantly in the first half of the 2017 financial year, due to China’s supply side reform policy and adverse weather conditions in China and Queensland.

“The future application of China’s coal supply reform policy remains a source of uncertainty. As currently constructed, the policy is positive for long-run industry sustainability,” it said. 

“The expected further concentration of blast furnace capacity in China towards contestable coastal locations will underpin seaborne metallurgical coal demand growth in excess of total pig iron demand.

“Over the longer term, emerging markets such as India are expected to support seaborne demand growth, while high-quality metallurgical coals will continue to offer steel makers value-in-use benefits.”