At a time when the coal mining industry is in a trough throughout New Zealand and Australia, one company is doing well.
Bathurst Resources surprised some coal industry watchers by recording a profit in the December 2015 half year. The company posted a net after-tax profit of $142,000 for the reporting period, compared with a loss of $7.179 million in the December 2014 half year. It also had an operating cash flow in the six months of $3.2 million, compared with an outflow of $2.2 million in the December 2014 half. Bank debt was now down to $2 million.
However, shrewder heads were impressed by CEO Richard Tacon’s no-nonsense approach and his trimming of all unnecessary costs.
“The key to survival and growth is on-site efficiencies … get productivity right, focus on the margin, not the coal price,’’ he says. In the past Tacon has emphasised that it’s not the price that matters – but the margin of profit.
The coal mines in the Buller, Southland and Christchurch produced a total of about 400,000 tonnes and improved operating margins that saw unit costs down 33 percent on the December 2014 half. Bathurst now holds 46 percent of the domestic coal market, with the dairy industry as a prime customer.
A report by Bathurst showed the company is focusing on the market for Takitimu coal in Southland. This could mean chartering foreign freighters at Bluff to move coal to east coast ports on both the North and South Islands.
This report also says the company is looking at shipping solutions on the West Coast to cater for North Island customers and to access export shipping. From a commercial perspective Bathurst would want to see a free-on-board cost target of $90 per product tonne for exporting coal to be viable. By Peter Owens.