The company had record coal production from its Curragh mine in Queensland’s Bowen Basin of 5.1 million tonnes in the last six months of 2008 and sales of 5.2Mt.

Metallurgical coal sales volumes from the mine reached 3.5Mt, some 11.2% above the previous six-month period with Wesfarmers also noting a 25.1% jump in steaming-coal deliveries.

Wesfarmers expects the full financial-year sales of metallurgical coal from Curragh to be in the range of 6.5-6.9Mt.

The coal and retail giant said negotiations to renew the annual price of Curragh met coal will take place over the next few months with most prices to reset at the start of April.

“The significant downturn in global steel production that has occurred in recent months will affect metallurgical coal prices and demand,” Wesfarmers said.

“The division’s earnings will also be impacted in the second half by the lag between coal prices and Stanwell rebate-payment obligations as well as the division’s foreign-exchange hedge book.”

Wesfarmers said work is continuing on a feasibility study for the potential expansion of the mine to between 8.0 and 8.5Mt export capacity, however, expansion timing and investment would depend on satisfactory market conditions.

At the Bengalla open cut mine in New South Wales’ Hunter Valley, which is operated by Rio Tinto Coal Australia, 40% stakeholder Wesfarmers said the joint venture’s sales volumes in the last half of 2008 were 7.5% below the corresponding period in 2007 due to infrastructure constraints.

However, Wesfarmers said sales volume from its wholly owned Premier open cut thermal coal mine, near Collie in Western Australia, had jumped 35.5% in comparison due to the Varanus Island gas disruption and upgrade work at the Muja Power station.

Of the retail sector, Wesfarmers said its Coles turnaround is gaining momentum.

The company’s insurance division is bracing for a $13 million hit to the current half earnings due to the expected net cost of claims from the Victorian bushfires.

Wesfarmers said earnings per share during the first half of the current financial year were 106.4cs compared to 127.3c in the corresponding period, which reflected an increase in number of the company’s shares.

Wesfarmers shares were up 7c to $16.30 this morning.