The loss compares with 2002 earnings of $159.7 million and half-year earnings for the six months to the end of June 2003 of $7.2 million.

Coal & Allied managing director Gary Goldberg said revenues continued to be affected by the "extremely strong" Australian currency and increased demurrage costs caused by a shortage of capacity in the Hunter Valley rail system.

Every 1 cent increase in the value of the Australian dollar against the US dollar cuts Coal & Allied's annual net profit after tax by around $9 million.

Similarly, every US$1 fall in the export coal price, or increase in demurrage charges – late loading fees – cuts Coal & Allied's after-tax profit by around $22 million.

"Year to date, the Australian dollar has averaged US64.1c compared to US54.3c for 2002 and has been above US74c today," Goldberg said in a statement yesterday.

"This, together with lower average realised coal prices for 2003 and demurrage costs averaging US$1 per tonne over the year, will adversely affect our results."

Although Chinese demand is fuelling spot steaming coal prices, most steam coal exported from Australia is sold under contract so the higher prices have yet to flow through to producers such as Coal & Allied.