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Bathurst picking further production gains on strong steel demand

Thursday 31st January 2019

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Bathurst Resources, the country’s biggest coal miner, is expecting production to climb to about 2.6 million tonnes during the next two years.

The firm and partner Talley’s Group produced 2.1 million tonnes in latest June year and last week raised its forecast for the current year to 2.4 million on the back of increased domestic and international demand.

In a presentation to investors today, the ASX-listed miner indicated production should beat 2.6 million tonnes in the 2020 financial year on continued demand for coking coal from the partners’ Stockton operation on the South Island’s West Coast.

Coal there is very low in both ash and phosphorus and improves the performance of other coals it is blended with for smelting.

Demand in the international steel market is expected to remain strong, driven principally by India and South-East Asia, Bathurst says.

Chinese buyers returned to the market as a number of import restrictions eased in the New Year and on-going safety concerns there will limit domestic production there.

“Trade tensions between the US and China will continue to create global uncertainties and a potential global market slowdown,” Bathurst said in a presentation slide.

“With Chinese production restrictions in place, prices are likely to remain just shy of US$200” a tonne, free on board.

Bathurst and Talley’s, through their BT Mining venture, acquired Stockton and the Rotowaro and Maramarua mines in Waikato from Solid Energy in 2017. Bathurst owns 65 percent of BT and also owns outright open cast mines in Southland and Canterbury and the Buller project, a potential coking coal development near Stockton.

It is forecasting full-year operating earnings of $105 million in the current year, up from its earlier forecast of $75 million and the $93.7 million it reported last year.

Its share of group production would increase to 1.7 million tonnes from almost 1.5 million a year earlier, with both export and domestic sales increasing.

Bathurst is expecting the North Island mines to deliver about 900,000 tonnes to New Zealand Steel, Genesis Energy and Fonterra this year.

Genesis, which operates dual-fuel generation capacity at Huntly, burned the most coal in five years during the December quarter due to low lake levels and tight gas supplies. It supplemented local purchases with coal imports.

Bathurst noted that new contracts enabled the firm to start stripping at the Waipuna West block, a southern extension of Rotowaro.

The firm also has pre-feasibility studies underway at Ruawaro, north-west of the current Rotowaro operation. Subject to go-ahead this year and consenting, development there, development could begin in 2022, according to its presentation.

The shares rose 4.2 percent, or 0.5 Australian cents, to 12.5 cents on the ASX in afternoon trading. 


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