Wesfarmers Limited · ASX:WES
Wesfarmers — Corporate Update (November 2010)
42 slides from Wesfarmers's corporate update, Nov 3, 2010
Slide 1: Management Briefing on Curragh Coal Operations
3 November 2010 The Manager Company Announcements Office Australian Securities Exchange Dear Sir, MANAGEMENT BRIEFING ON CURRAGH COAL OPERATIONS Following is a presentation that is to be given today at a management briefing on Wesfarmers’ Curragh coal operations. The briefing will be held today at 3
Slide 2: Curragh Operational Briefing
Wesfarmers Resources Limited Curragh Operational Briefing 3 November 2010
Slide 3: Agenda
Agenda Item Presenter 1 Wesfarmers Resources Stewart Butel 2 Overview of Curragh Mine Rod Bridges 3 Export market update Rob Brenchley 4 Curragh expansion update Stewart Butel 5 Outlook Stewart Butel 6 Questions Stewart Butel 2
Slide 4: Resources division management team
Resources division management team Managing Director Stewart Butel Director Marketing & Development Rob Brenchley Chief Financial Officer Michael Ball Executive General Manager Curragh Rod Bridges General Manager Sales & Marketing Curragh Matt Latimore General Manager Business Development Michael Di
Slide 5: Curragh operational & marketing structure
Curragh operational & marketing structure OPERATIONS MARKETING Executive General Manager General Manager Sales & Marketing Rod Bridges Matt Latimore Operations Expansion / Support Marketing & Logistics Maintenance & CHPP Marketing Mining Asset Technical CHPP Expansion Commercial HSE & Human Expansio
Slide 6: Wesfarmers Resources
Wesfarmers Resources Export metallurgical & domestic QLD steaming coal Domestic steaming coal WA Export & domestic steaming coal NSW (40% ownership) 5
Slide 7: Overview of Curragh Mine
Overview of Curragh Mine Rod Bridges Executive General Manager Curragh
Slide 8: Curragh – significant milestones
Curragh – significant milestones Mine opened 1983 First export shipments 1984 Wesfarmers purchase of Curragh June 2000 Curragh East development 2001 Coal preparation plant upgrade 2002 & 2004 Curragh North development 2004 – 2006 Announced Curragh expansion to 8.0 – 8.5mtpa exports November 2009 Com
Slide 9: Curragh mine location
Curragh mine location • Located in Central Queensland – Heart of the Bowen coal basin • World prominence – Largest metallurgical coal reserve • Close to major infrastructure – Electrified rail – 75mtpa port facility – Electricity grid – Dormitory town – Coastal proximity Coal measures indicated in g
Slide 10: Curragh mine
Curragh mine • Open cut mine • Large draglines & fleet of mobile equipment • 500 experienced personnel • 9.0 - 9.5mtpa capacity coal handling & blending facilities • Multi product mine: – Low ash export metallurgical coal – 75% – Medium ash domestic steaming coal – 25% 9
Slide 11: Mining methods
Mining methods Strip 25 Strip 26 404 Wesfarmers Resources 10
Slide 12: Overburden removal
Overburden removal dragline • Fleet of five draglines • Largest is a Marion M8750 ‘Super’ Dragline • 6,500 tonnes, 114 bank cubic metres (bcm) bucket, 30mbcm/pa Overburden removal truck & shovel • Pre-strip ahead of dragline fleet • Combination of contractor & owner operator • Upgrading fleet to ‘ul
Slide 13: Coal mining
Coal mining • Selective mining • Coal sourced from: – Curragh – Curragh East – Curragh North Curragh North ROM • 21km in length • Largest single flight conveyer • 2,500tph capacity 12
Slide 14: Crushed plant feed stockpiles & coal handling and preparation plant
Crushed plant feed stockpiles & overland conveyor (‘OLC’) • 2 x 60,000 tonne crushed coal stockpiles • Ability to direct feed from OLC, Curragh ROM’s Coal handling & preparation plant • 1,600tph capacity • Two stage washing • Primary circuit – metallurgical coal • Secondary circuit – steaming coal 1
Slide 15: Coal Handling Preparation Plant layout
Coal Handling Preparation Plant layout Curragh North Conveyor Reclaimers Sampling Points 2 x Raw Coal (being installed) 2 x Plant Feed 1 x Export Product 1 x Middlings Product 1 x Bypass 1 x Train Loadout Preparation plant Coal Handling Plant feed raw coal stockpiles Raw Coal stackers 500 ton Bin Br
Slide 16: Train loadout and Port of Gladstone
Train loadout • 7,000 – 8,000 tonnes capacity trains • 305km to the Port of Gladstone Port of Gladstone RGTCT • Two export terminals at Gladstone • RGTCT & Barney Point ‘RGTCT’ refers to the R G Tanna Coal Terminal 15
Slide 17: Curragh export market update
Curragh export market update Rob Brenchley Director Marketing & Development
Slide 18: Curragh export market update
Curragh export market update • Established Curragh brand & quality • Diversified product range • Positioned as ‘independent’ supplier • World leading steel makers as key customers • Positioned for future growth 17
Slide 19: Coking coal utilisation
Coking coal utilisation Blended Coking by Consumer Coke Iron Ore Coal Oven Limestone Blast Furnace PCI Coal Pig Iron ‘PCI’ means Pulverised Coal Injection 18
Slide 20: Queensland hard coking coal indicative quality comparison
Queensland hard coking coal indicative quality comparison Australian Hard Coking Coals VM% adb Ash% vs VM% Air Dried Basis (adb) 35 34 Kestrel Gregory 33 32 31 30 Stratford 29 Dawson HV 28 Blackwater 27 Tahmoor 26 Dawson C Cook Oakey Crk Moranbah & Collinsville 25 Goonyella 24 23 Burton Nth Goonyell
Slide 21: Curragh export metallurgical sales
Curragh export metallurgical sales Hard Hard 47 % Semi Hard 47% Semi Hard 21% 21 % PCI PCI 32% 32% 2009/10 Actual 2010/11 Forecast 6.6 million tonnes 6.2 – 6.7 million tonnes 20
Slide 22: Curragh medium sized metallurgical coal player
Curragh medium sized metallurgical coal player Wesfarmers, 7 Peabody, 6 BHP Billiton, 29 Mechel, 7 Rio Tinto, 7 Evraz, 10 Mitsubishi, 23 Xstrata, 11 Anglo, 14 Teck, 21 Million tonne (mt) traded seaborne metallurgical coal Source: AME 21
Slide 23: Curragh metallurgical customer mix 2010
Curragh metallurgical customer mix 2010 Americas Europe 3% 10% Japan South Asia 45% 24% Queensland Japan Chamber of Commerce & Industry Other North Export Excellence Awards - Winner Asia 18% 22
Slide 24: Australian coal market prices
Australian coal market prices Australian steaming coal prices Australian hard coking coal prices US$/Tonne (Nominal) FOB Australia (annual verse spot) US$/Tonne (Nominal) FOB Australia (annual verse spot) 200 400 150 300 100 200 50 100 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007
Slide 25: Curragh export sales pricing
Curragh export sales pricing Annual priced contracts 25% 75% Quarterly priced contracts 24
Slide 26: Metallurgical demand growth will largely stem from Asia
Metallurgical demand growth will largely stem from Asia. Australia will continue to be the main export supplier. Global Metallurgical Coal – Export Projections Asian Metallurgical Coal - Import Projections 450 450 400 400 350 350 300 Other 300 Met Exports (Mtpa) Met Imports (Mtpa) Mozambique Other A
Slide 27: Curragh metallurgical sales growth
Curragh metallurgical sales growth tonnes (mtpa) 10 Committed Study 9 expansion expansion 8 7 6 5 4 3 2 1 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year Ending June 26
Slide 28: Curragh expansion update
Curragh expansion update Stewart Butel Managing Director
Slide 29: Curragh mine expansion
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Slide 30: Curragh mine expansion (continued)
Curragh mine expansion (continued) • Expand metallurgical coal exports to 8.0mtpa - 8.5mtpa • Approved capital expenditure of $286 million • Export rail & port capacity contracted • Expansion tonnage sales contracts in place • Construction underway • Two week shutdown of existing Coal Handling Prepa
Slide 31: New coal preparation plant
New coal preparation plant • Design & construct contract awarded via competitive New CHPP tender Existing coal rail • 1,200tph nominal capacity bins • Located adjacent to existing Existing CPP reject bin • Existing CPP (25 years old) Steaming to be de-rated Coal Tie-in Existing CHPP • Ample capacity
Slide 32: New CHPP construction – 25 October 2010
COMMENT: Can we add descriptions or dates? New CHPP construction – 25 October 2010 31
Slide 33: Blackwater Creek diversion
Blackwater Creek diversion • Access to additional metallurgical coal • Civil works completed September 2009 • Practical completion achieved December 2009 • Capital expenditure $120 million • Project completed ahead of budget & timeline 32
Slide 34: Curragh expansion study to 10mtpa exports
Curragh expansion study to 10mtpa exports • Feasibility study (‘FS’) commenced – Mining & Coal Handling Preparation Plant studies • Potential to expand Curragh to 10mtpa metallurgical exports from FY14 – Wiggins Island commissioning – Additional rail capacity required – Potential for additional drag
Slide 35: Wiggins Island coal export terminal
Wiggins Island coal export terminal • Stage 1 – 27mtpa • Financial close first half CY2011 • First shipment 2014 • Curragh is a Stage 1 participant • Cumulative capacity with Stage 2 & 3 – 80mtpa 34
Slide 36: Outlook
Outlook Stewart Butel Managing Director
Slide 37: September rainfall – impact on production
September rainfall – impact on production Bowen Basin highest • Record September rainfall in September rainfall on Central Queensland record • Southern Bowen Basin mines affected • Impact on Curragh’s Q1 FY11 production • Cost per tonne affected by lost production in H1 FY11 • Forecast Curragh metal
Slide 38: Continued focus on cost control
Continued focus on cost control • Re-emergence of tight labour market & industry cost pressures – Higher staff turnover – Contractors, parts, consumables, utilities – State royalty • Impact of wet weather on Q1 coal production & costs – Lost production due to wet weather & extended Dragline 304 shut
Slide 39: Current hedging profile – as at 1 Nov 2010
Current hedging profile – as at 1 Nov 2010 Curragh Bengalla Current US$ Average Current US$ Average Year end 30 Year end 30 sold forward A$ / US$ sold forward A$ / US$ Jun Jun (US$m) hedge rate (US$m) hedge rate 2011+* 497 0.85 2011+* 76 0.82 2012 546 0.83 2012 82 0.80 2013 407 0.80 2013 61 0.79 201
Slide 40: Resources outlook
Resources outlook • Q2FY11 pricing negotiations completed – 11% decrease on Q1FY11 • Strong shipping performance from our traditional customers • Continuing focus on cost control • Strong Australian dollar • Impact of wet weather on H1 FY11 results approximately negative $80 - $100 million EBIT • St
Slide 41: For further information
For further information Alex Willcocks Stewart Butel Manager Investor Relations & Planning Managing Director Wesfarmers Limited Wesfarmers Resources T: +61 8 9327 4323 T: +61 7 3031 7794 E: ir@wesfarmers.com.au
Slide 42: www.wesresources.com.au
WWW.Wesresources.com.au 404 Wesfarmers Resources