Curragh efficiency improvement helps drive Coronado earnings

OPERATIONAL improvements at Coronado Global Resources’ Curragh mine complex in Queensland helped the company increase its earnings and reduce operating costs in 2019.
Curragh efficiency improvement helps drive Coronado earnings Curragh efficiency improvement helps drive Coronado earnings Curragh efficiency improvement helps drive Coronado earnings Curragh efficiency improvement helps drive Coronado earnings Curragh efficiency improvement helps drive Coronado earnings

The Curragh coal mine in Queensland.

Curragh's run-of-mine production increased 6.4% to 16.4 million tonnes, driven by improved dragline performance and further mining efficiencies.

Earnings before interest, depreciation and amortisation of US$634.2 million in FY19 were 5.9% higher than the previous year and net income was up substantially to $305.5 million, an increase of 80.9%.

These gains were achieved on stable saleable production of 20.2Mt and an 8.2% reduction in mine costs per tonne sold.

Coronado CEO Gerry Spindler said in 2019 Coronado focused on developing an accelerated mine expansion plan for Curragh and securing rail and port infrastructure to support the expansion and planned blending operations.

"In 2020 we will continue to focus on improving productivity and maintaining a disciplined approach to cost management and capital allocation," he said.

"Our key objectives are to efficiently manage the capital projects that will facilitate the Curragh mine expansion, improve metallurgical coal recovery by 5% at the Curragh plant; and add prime digging capacity at Curragh North to capitalise on the acquired Stanwell reserve area."

Spindler also addressed the tragic fatality of a contract worker at Curragh in January.

"The safety and welfare of our employees and contractors is our number one priority," he said.

"While safety metrics for our US and Australian operations outperformed their respective national averages in FY19, a contractor at the Curragh mine was fatally injured during a tyre change activity in the main workshop in January 2020.

"This tragedy has affected everyone at Coronado. We are conducting our own extensive investigations to understand the causes of the incident and to support the third-party reviews that are underway."

Revenue of $2.2 billion was down 3.5% compared to FY18 due to softening demand leading to lower realised metallurgical coal pricing in the second half of the year.

Group mine cost per tonne sold was $51.8, an improvement of 8.2% compared to FY18, and within the guidance range of $51 to $52 per tonne.

Operational efficiencies and a favourable exchange rate conversion at the Australian operations were the main contributors.

Coal handling and preparation plant operating hours continued to improve during FY19, which contributed to a 6.7% increase in sales volumes to a record 12.8Mt and partially offset softer coking coal market conditions experienced in the second half of FY19.

"In a year of sustained activity at Curragh, a three-year employee enterprise agreement was implemented, a new coal supply agreement with Stanwell Corporation was executed, and a long-term contract was awarded to Thiess to provide mining services at Curragh North," the company said.

"Importantly, the new Curragh accelerated mine plan was completed and is now being progressed.

"Implementation of the new Curragh mine plan will be the key focus for the company in FY20. The accelerated expansion plan is targeting increased saleable production of 15Mt by 2023 with incremental production growth of 2Mt by 2023."

Infrastructure contracts relating to rail and near-term port capacity that underpin the expansion plans are in place and a long-term port solution post 2022 is being negotiated with Wiggins Island Coal Export Terminal and the representative shippers.

The capital program to improve the train load out performance and related CHPP capital works is advancing, with detailed construction and procurement activities to start in the near term.