Whitehaven Coal expects to lodge the environmental impact statement (EIS) for its $1 billion Winchester South open-cut coal project by the end of 2020.
Managing director and chief executive officer Paul Flynn told the AGM today that ongoing demand gave the company the confidence to plan for growth.
This would support increased margins through product diversification, benefits of scale and synergies across the business, he said.
The Whitehaven growth strategy includes major greenfields projects – the Vickery Extension Project in New South Wales and Winchester South near Moranbah in Queensland.
There are also plans for ramp ups at Maules Creek and Tarrawonga and the Narrabri Stage 3 life extension project.
Whitehaven has indicated it does not does not expect to consider making a Final Investment Decision in relation to new projects in the current financial year.
However work to advance Winchester South continues including coal quality studies and supporting pre-feasibility studies on the CHPP, rail spur, and other site infrastructure.
“Our Winchester South metallurgical open-cut coal project, situated in the Bowen Basin, is focused on finalising its maiden reserves and lodging the EIS this calendar year,” Mr Flynn told the AGM.
“A range of technical studies have also materially progressed to support the project. Planning for necessary on and off site infrastructure has also been advanced.”
Mr Flynn said some 200 new drill holes had been undertaken to improve understanding of the product suite available in the Rangals and Fort Cooper coal measures since Whitehaven acquired the project.
“Once the final results of the coal quality program are received from the laboratory and assessed, Whitehaven intends to update the October 2018 JORC Resources statement and declare a maiden JORC Reserve statement for the project,” he said.
Whitehaven Coal took on Rio Tinto’s 75 per cent interest in the Winchester South coal development project for $200 million in 2018.
The Winchester South open-cut mine is expected to deliver 500 new construction jobs and support up to 450 full-time jobs once operational.
The AGM heard that the Vickery and Winchester South development projects would help Whitehaven to further diversify its product mix, with a
greater weighting towards metallurgical coal with low impurities.
“Our strong relationships with customers in India will put us in a good position to meet the forecast growth in demand for metallurgical coal in that market, particularly once Vickery and Winchester South are operational,” chairman Mark Vaile said.
Mr Vaile noted the impact of COVID-19 on coal markets, but said recent weeks had brought meaningful improvement in benchmark coal pricing.
“The forward curve is also looking stronger, so it is likely a fundamental shift is occurring and a broad-based coal price recovery across both thermal and metallurgical markets is now underway,” he said.
‘It is pleasing that, amid the various efforts to reduce costs in the business up to now, we have not had to resort to the type of deep workforce cuts and restructuring experienced elsewhere.”
Whitehaven reported an underlying EBITDA of $306 million last financial year compared to just over $1 billion in the previous year due to the impact of softer coal prices and an increased cost base.