Financials and operations

Operating highlights by site

Rotowaro (65 percent equity share)

Rotowaro is an open cut mine located in the Waikato region of the North Island. The mine produces a low-ash, low-sulphur thermal coal for local steelmaking, electricity generation, and other food and agricultural industries.

Adverse weather presented a major challenge for our operations at Rotowaro during the first half of FY20, causing downtime of an average of 40 percent, versus budgeted downtime of 27 percent. Whilst this did not materially impact sales and production volumes, planned overburden stripping volumes were significantly affected.

This deficit was unable to be recouped in the second half of FY20. Being our largest domestic mine site, in order to operate safely during the lockdown we reduced overburden volumes to minimum levels required to maintain immediate coal supply. Mechanical issues experienced in the mobile plant also affected machine availability and increased plant hire and maintenance costs.

Whilst these factors did cause a marginal flow on effect on planned production, sales targets were achieved by drawing down on stockpiles.

We engaged contractors to help with stripping levels and these will continue into FY21 to ensure contracted sales are met. The majority of overburden stripping is planned in the Waipuna West pit.

Maramarua (65 percent equity share)

Maramarua is our smaller Waikato mine, producing similar coal and selling into the same market as Rotowaro.

FY20 was a solid year for Maramarua. All key operational and financial targets were met, largely unaffected by the lockdown. This was despite the challenges from geotechnical issues which required proactive management to ensure operations were not materially impacted.

In contrast to the Rotowaro operations, downtime caused from adverse weather was less than expected, enabling operations to get ahead on overburden stripping volumes. This has left the mine well positioned heading into the next financial year.

Stockton (65 percent equity share)

Stockton is an open cut mine located on the West Coast of the South Island, producing a low-ash metallurgical coal that is exported overseas for use in steelmaking. Our primary markets are in India, Japan, South Korea and Australia.

The 4.5 week shutdown of the mine across March and April during the lockdown had an impact on the mine’s operational and financial targets. Productivity improvements implemented to help counter these impacts have now been permanently adopted, and we are well set to meet contracted FY21 sales.

We commenced the construction of a water treatment sump and lime dosing plant in the latter part of the year. These facilities will significantly reduce water treatment costs and provide for future mine expansion.

A key engineering focus for the mine was the de-risking of the Cypress pit. This saw an increase in high-wall stability costs, and the opening up of additional coal face areas to ensure continued access to coal.

We engaged external consultants to identify ways that we could work smarter, which identified several areas for improvement and these are being progressively implemented.

Our efforts to protect local indigenous bird populations was placed as a finalist in the Minerals Sector Awards 2020, recognising the great work being done to minimise our impacts on native birdlife including the iconic great spotted kiwi (roroa).

Canterbury (100 percent equity share)

Operating 70 kilometres west of Christchurch, our Canterbury mine produces low-sulphur coal for local food manufacturing industries. Our mine is managed against long-term contracts and is located very close to its major customer.

This year saw solid results, with all operational targets met and financial targets exceeded, benefiting from coal with a higher calorific value which translated to a higher price received.

The announcement of our success as a finalist in the Minerals Sector Awards 2020 in addressing legacy acid mine drainage (“AMD”) issues and preventing future AMD, is welcome recognition of longstanding efforts to reduce AMD at the mine.

We have made significant investment over the last five years in understanding the source of the AMD, and how the waste materials and landforms unique to the site help contribute to the occurrence of AMD.

We have had challenges, with infringement notices issued in late 2017 and a prosecution in 2018 relating to sediment discharges which occurred during heavy rain periods while water control structures were incomplete, for which we were later convicted and fined. But we have adapted – changing our mine plans and practices, and implementing processes to proactively plan for significant rainfall events by increasing capacity of water management infrastructure and improving water treatment facilities.

As a result, we have seen a substantial improvement in water discharge quality, and the removal of legacy AMD that had been caused by a previous mine owner.

Takitimu (100 percent equity share)

Located north of Invercargill in Southland, our Takitimu mine produces thermal energy coal which is highly sought after by local agricultural, health and other food manufacturing industries.

With the final coal mined from the Coaldale East pit in November, operations are now solely focused on the Black Diamond pit which contains historic multi-seam underground workings. We have proactively managed and monitored the complexities specific to this pit, which include underground coal heating, and potential for minor spontaneous combustions.

Key operational and financial targets were achieved, with operations proceeding largely as expected.

We continue to look ahead, with drilling programmes completed during the year to give a better understanding of coal resources.