Coal drags down Wesfarmers

WESFARMERS yesterday posted a 25% drop in full-year profit to $A786.3 million, mainly attributable to lower export coal prices from the company's Curragh mine.

Staff Reporter

Wesfarmers has an interest in three coal mines across Australia – Curragh, Premier Coal and Bengalla.

While earnings of $A338 million were 41.5% lower than the previous year due to lower prices and increased costs, total sales volumes from Curragh of 8.7 million tonnes were 1.5% above those achieved last year.

“Metallurgical coal sales from the Curragh mine will continue to increase with near-term growth influenced by levels of performance from rail and port infrastructure," the company said.

Curragh is beginning a feasibility study into the expansion of the mine to achieve export tonnages of 8–8.5Mt of metallurgical coal.

Premier Coal in Western Australia achieved steaming coal sales volumes of 3Mt for the 2006-07 year, 20% lower than last year.

The Bengalla coal mine in New South Wales, in which Wesfarmers holds a 40% stake, posted sales volumes of 5.5Mt for the year, slightly higher than the previous year.

There are now plans to increase production at Bengalla to 10.7Mtpa, with the final decision on the expansion being dependent on adequate rail and port infrastructure.

Overall, managing director Richard Goyder said the company had achieved another successful year.

“As we foreshadowed 12 months ago and confirmed at the time of our half-year result in February, the full-year profit is down on last year’s record because of the drop in coal prices,” he said.

“Looking ahead, the directors expect that all existing divisions with the exception of coal will make increased contributions to the 2007-08 profit result.

“Lower export coal prices will have a negative impact for the first three quarters of the current financial year but current expectations are for a lift in prices in the final quarter and beyond, subject to timing of fulfilment of current year contract volumes."