Wesfarmers joins the quarterly club

WESFARMERS has followed BHP Billiton’s lead and settled its first June quarterly contracts for hard coking coal at $US200 a tonne.
Wesfarmers joins the quarterly club Wesfarmers joins the quarterly club Wesfarmers joins the quarterly club Wesfarmers joins the quarterly club Wesfarmers joins the quarterly club

Courtesy Wesfarmers

Blair Price

This is a 55% premium on the annual benchmark set last year, and Wesfarmers also said the average April-June contract prices for its range of metallurgical coal (hard coking, semi-hard coking and pulverised coal injection) were up by about 70%.

Wesfarmers left only 25% of its contracted coal tonnage under the traditional annual pricing system, which covers the Japanese financial year starting April 1.

Of this amount, the coal producer and retail giant said it had received a 75% price gain from last year.

Wesfarmers Resources managing director Stewart Butel said the company was satisfied with the results of its negotiations under the new quarterly system.

“Current demand from customers continues to remain strong,” he said.

But he revealed met coal sales from the Curragh open cut operations in Queensland would be at the lower end of the 6.3-6.8 million tonne forecast for the current financial year.

Cyclone Ului, bad weather and other unforeseen events during the state’s wet season had an impact on most mines.

While the Hay Point Coal Terminal returned its other berth to operation last week, some repairs could still continue until May.

Other setbacks included production cuts and delays at various mines, a train derailment in the Blackwater rail corridor in February, a power outage at Hay Point and the temporary closure of Gladstone’s port.

Wesfarmers declared a force majeure from January 13 to 17 after a cable failure halted its 20.02km overland conveyor, which links the Curragh North coal deposit to the Curragh mine wash plant.

Wesfarmers plans to ramp up its Curragh operations from 6.5 million tonnes per annum of metallurgical coal to 8-8.5Mtpa by late 2011 under an agreement made with Stanwell Corporation to gain access to an extra 46Mt of reserves.

Rio Tinto and Vale recently inked quarterly contracts for iron ore.

Wesfarmers shares closed up 42c to $32.70 yesterday.