Centennial keeps profits warm with thermal coal

WHILE the coking coal companies have been laughing all the way to the bank for the past few years, it looks like Centennial Coal will have the last laugh this year as its thermal coal, domestic contracts and export demand protect it against the full brunt of the global economic crisis.
Centennial keeps profits warm with thermal coal Centennial keeps profits warm with thermal coal Centennial keeps profits warm with thermal coal Centennial keeps profits warm with thermal coal Centennial keeps profits warm with thermal coal

Courtesy Centennial Coal.

Angie Tomlinson

“While the coal industry cannot be immune from the global financial crisis, our business model is proving to be resilient in the current difficult economic climate, with no sign of demand weakness yet evident,” Centennial chief executive Bob Cameron said.

“Importantly, our domestic sales provide us with a strong and stable cash flow, while our increasing export sales underpin our growing profitability.”

The New South Wales miner said strong thermal export coal sales were driven by a northern hemisphere winter and customers seeking security of supply, particularly through Port Kembla.

Run-of-mine coal production under Centennial management totalled 4.8 million tonnes for the quarter and 9.2Mt on a year to date basis, while sales were 4.7Mt and 8.5Mt respectively.

Springvale and Mandalong were the stand-out performers for the December quarter.

Springvale clocked up 970,000t for the December quarter, setting a monthly production record in November.

The record was set despite the Springvale longwall once again running into unfavourable floor geology in the maingate roadway.

The Mandalong mine produced record longwall ramp-up from LW6 to LW7 and remains on track to achieve its production target for the year. The mine recorded output of 1.415Mt over the quarter.

Centennial said the strong production performance was underpinned by improvements to the coal clearance system and face operating procedures, as well as increased reliability from the new armoured face conveyor pans installed on LW7.

To keep up with the longwall, Mandalong will introduce a temporary fourth development unit.

Despite being close to shutting, the Newstan longwall experienced a second wind with a strong 712,000t produced for the quarter as it moves towards mining its last longwall block.

Centennial has decided it will only mine the LW25C area due to falling semi-soft coking coal prices and expects to be finished up by early May.

The news was not as good at the Angus Place longwall, where the December quarter saw an extended longwall ramp-up and commissioning and trouble from the Wolgan Zone.

The mine produced below expectations at 389,000t.

“During the latter part of October, ground conditions again deteriorated as the longwall negotiated through a ‘swilly’ area, compounded with high water ingress on the longwall face,” Centennial said.

“Furthermore, difficult conditions associated with the Wolgan Zone were encountered during November and December, resulting in a number of cavities along the face and in the tailgate.”

Centennial expects to be rid of the Wolgan Zone during the early part of this year.

Exploration drilling in the northeastern area of the Angus Place lease has also indicated the potential for up to four additional longwall panels, Centennial said.

The Charbon operation produced 308,000t for the quarter, up 20% as it reaped the benefits of a shift restructure.

High demand for Charbon’s thermal product has pushed Centennial to look to extending the life of the mine and Centennial now expects to lodge a development consent in March to mine the remainder of the lease’s area not already covered.

The Clarence longwall, which will be a recipient of a Joy Flexible Conveyor Train to replace its shuttle cars towards the end of the year, produced 434,000t for the quarter, 40% ahead of expectations.

The Awaba mine produced 196,000t for the export market during the December quarter.

An application has been submitted for a revised operating plan to extend the mine’s life by four months into mid/late 2010.

The Mannering operation produced 128,000t, down on expectations as it struggled through bad conditions.

“During the quarter, one place change unit was relocated and after some time spent setting up the new panel and re-supporting areas of deterioration, it is now experiencing improved mining conditions that are expected to enable increased output,” Centennial said.

“A second place change unit continued to operate in variable mining conditions, while the third unit is still negotiating the reverse fault zone, with a view to accessing a large new resource area that will open up the mine for the longer term.”

At Myuna, 256,000t was produced during the quarter, while Berrima produced 27,000t.

To overcome Berrima’s problems, a new extraction panel is currently being established and machine reliability is being addressed with a recently overhauled continuous miner being delivered to the mine to start development of a new extraction panel at the start of the June quarter.

On the project pipeline front, Centennial will review the design of its Awaba East project click here to read full report.

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