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Peabody's productivity gains ease the pain

Editorial
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The search for productivity gains within Peabody Energy’s business is starting to pay, with the miner announcing it has improved production unit costs by 18 per cent since 2012.

Peabody said productivity gains were helped along by the Australian dollar falling below parity with the US and the new Abbott government which is promising to remove both the carbon and mining taxes.

Peabody chairman and chief executive Greg Boyce said the new federal government "fosters policies to improve the competitive position of the resource sector".

Boyce said the company’s Australian mines continue to widen competitive advantages in the seaborne coal markets.

"Metallurgical coal fundamentals are improving and continued build out of new generation is driving record thermal coal demand. Supply rationalisation is continuing as higher cost mines in the US and China close, and other exporting nations face increased domestic demand and rising costs,” he said.

Releasing its third quarter results, Peabody posted a net loss of $US26.1 million, down from $US42.9 million profit achieved a year earlier.

Lower coal prices for its Australian operations were partly offset by a boost in production, with shipments increasing by 6 per cent to nine-million tonnes of coal.

An 8 per cent improvement in costs with savings, contractor reductions and productivity improvements also assisted in counterbalancing the company’s Australian losses, The Australian reported.

Third quarter revenues amounted to $US1.8 billion, down from $US2.06 billion in the corresponding period last year. Peabody cited lower prices in both US and Australian markets for the fall.

Peabody said it will cut its full-year capital spending target to $350 million, down from $400 million, as it focusses on sustaining existing operations.

Earlier this year Peabody took the axe to its Australian workforce, cutting 400 contractor roles in June and another 400 roles across NSW and Qld in July, as it attempted to conduct a ‘repositioning and improvement program’ to reduce costs.

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