Australian mining firm Stanmore Coal has lifted it production guidance for the 2018-19 fiscal year to 30 June to 2.3mn t from 2.15mn t amid minimal disruptions from the Queensland wet season that runs to the end of April.
Stanmore operates the Isaac Plains mining complex in the northern Bowen basin. Several mining firms are likely to have had a better than expected January-March production quarter because of the relatively calm Queensland wet season. The bottleneck may have been at the ports, with exports hitting a 22-month low in February because of disruptions at Abbot Point and Dalrymple Bay Coal Terminal (DBCT). Abbot Point exports rebounded last month, while DBCT exports were still depressed in March.
The combination of ports increasing operational activity and mining firms looking to run down stocks at mines could increase the desire to ship coal over the next couple of months, which could put downwards pressure on prices.
Argus last assessed the price for premium hard coking coal, which is largely exported from Queensland, at $202/t fob Australia. It has been around $200/t for most of the past six months, up from a low of around $75/t in early 2016. This sustained higher price has led to some production creep in Queensland and the restart of some mothballed mines.
Stanmore produced 691,000t of coal during January-March, up from 302,000t a year earlier and from 641,000t for October-December. It sold 740,000t, up from 404,000t and 573,000t on the same comparisons.
It sold 719,000t of semi-soft coking coal in the latest quarter at an average price of $132/t and 21,000t of thermal coal at $84/t. The sales split is moving more towards coking coal with the ramp-up of its Isaac Plains East mine. The production was split 81pc semi-soft coking coal and 19pc thermal during October-December.
Production costs rose fell to A$82/t ($58.4/t) fob DBCT from A$105/t the previous quarter, excluding A$15/t in state royalties. Stanmore moved up its cost guidance for 2018-19 of A$88/t from a previous guidance of A$86/t.
Stanmore's pricing for its semi-soft coking coal is based on a quarterly negotiated benchmark price agreed in advance at the start of the quarter, as well as a negotiated lagging benchmark price. This references the hard coking coal index of the first two months of the current quarter and the last month of the previous quarter.
The company is looking to expand Isaac Plains through the development of an underground mine. A final investment decision on the underground project is still scheduled to be delivered by the end of June.
