New Hope Corporation is seeking a substantial reduction of rail costs from its Queensland mines, as it announced a $20.2 million underlying pre-tax profit on Tuesday.
New Hope processed 5.1mt of ROM coal, producing 2.5mt of saleable coal in the first half of 2015/16.
Managing director Shane Stephan, speaking at New Hope’s financial presentation on Tuesday, emphasised as part of cost reductions, more focus was needed on reducing rail, energy and inefficient regulatory costs.
He noted that a new deal was needed for rail haulage, specifically.
Stephan was quoted by the AFR: “The focus now is off-site – above and below rail. We are looking for significant relief of rail access costs in the order of several dollars a tonne.
“Access undertakings should have been resolved four to five years ago.”
Contributing to hefty rail costs is the 210km-plus trip from New Hope’s mines to port on Queensland’s western line, as well as the age of the track, which restricts speed limits and axle loads, impacting volumes, Stephan reportedly said.
New Hope is lobbying the Queensland Competition Authority to contain the charges it regulates on the infrastructure, and is said to be working with rail provider Aurizon to improve above-rail operations.
The company announced a net profit after tax of $15.0 million before non-regular items, and $2.7 million after non-regular items, for the first half.
New Hope recently acquired Rio Tinto’s 40% stake in the Bengalla mine in the Hunter Valley for $865 million.
According to the AFR, Stephan said the mine was well-positioned to generate cash immediately, reportedly saying: “We’ve done most of the heavy lifting on the mine”.
New Hope’s earnings per share for the half were up to 0.3c, compared to a 2.8c per share loss in the first half of last financial year.
“This is a strong operating result at a time of continuing challenges for Australian coal producers,” Stephan said in a press release.
“We have successfully managed our margins whilst simultaneously agreeing to acquire a significant mining asset (Bengalla), underlining the operational and financial strength of the group.
“Market conditions for Australian coal producers are challenging at present; however, New Hope has efficient operations and is in a robust financial position, so we are well placed to see out the current downturn and take advantage of these conditions to grow the business for the future.”