Whitehaven Coal is betting on rising Asian demand for higher quality coal as it ramps up production despite weaker prices.
The east coast miner achieved another quarter of record production in the three months to March and has reaffirmed its full year guidance, helped by improving output at its new Maules Creek mine in NSW.
“This has been a workman-like quarter for us and one that puts us firmly on track to meeting guidance for the full year,” managing director Paul Flynn said.
Whitehaven shares jumped on the news, up 10.5 per cent at 74 cents at 1300 AEST.
Increasing production comes despite an extended slump in global prices – due to weakening demand in China and a supply glut – that is taking a toll on leading coal producers.
Peabody, the world’s biggest private sector coal producer, has filed for US bankruptcy protection as plunging prices have left it unable to service debt of $10.1 billion, much of it incurred for an expansion into Australia.
Whitehaven has tried to offset price falls by increasing exports to Japan, South Korea, Taiwan and India, where it receives a premium for its higher quality coal.
“Every single one of our customers is growing and we have been seeing strong interest from new buyers in Asia,” Mr Flynn said.
The miner plans to complete a further ramp up in production at Maules Creek to 10.5 million tonnes per annum by January 2017.
Whitehaven produced 2 million tonnes of coal at Maules Creek during the March quarter, with the mine currently producing at an annual rate of 8.5 million tonnes.
Its average realised price for thermal coal, its main export, was $US51.56 per tonne in the March quarter, down from $US54.61 a tonne in the previous three months.
The average price for its metallurgical coal, used by the steel industry, was $US61.77 per tonne, down from $US65 per tonne in the preceding quarter.
Thermal coal, used to generate electricity, accounts for 85 per cent of Whitehaven’s total sales, although it hopes to bring this proportion down to two thirds over the next few years.
The company said it has trimmed costs further on the back of higher production, and now expects full year cash costs at $57 a tonne.