Macarthur Coal Says Profits May Fall

Macarthur Income May Be 39 Per Cent Down

Australian coal miner Macarthur Coal Ltd has said that full-year profits may fall as much as 39 percent from a year ago after a fall in prices.

Net income may be A$103 million to A$113 million for the year ending 30 June from A$168.6 million in 2009, the company said in a statement to the Australian stock exchange.

Macarthur is currently the target of a A$4.1 billion ($3.8 billion) takeover offer from America’s Peabody Energy.

“Profitability in the June 2010 quarter has improved given recent coal price settlements with higher prices starting April 1”, the company said in the statement. Macarthur said it is still on course for full-year sales volumes of 4.8 million to 5.0 million tons.

Coking coal prices have risen sharply in recent months after the global steel industry came into recovery. A number of global coking coal suppliers including BHP Billiton, Rio Tinto and Teck Resources won a shift from annual to quarterly contracts and a rise of 55 per cent for supplies in the April to June quarter. Australia’s Centenntial Coal also warned of a tightening in the global supply of the product.

Peabody asked Macarthur, the world’s largest exporter of pulverized coal, for more information after completing a review of its finances yesterday. The American miner is also said to be concerned after the Australian government announced on Sunday that it plans to bring in a new 40 per cent tax on mining company’s profits. Macarthur said on Tuesday that the new tax had a brought an air of uncertainty to the industry.

Centennial Warns Of Higher Met Coal Prices

Global Supply "Fragile"

Australian coal exporter, Centennial Coal, has said that fragile supply conditions in the global metallurgical coal market mean that it expects the contract price to "significantly increase" from the $US200 per tonne in the Japanese fiscal first quarter.

In March Japanese steel mills agreed to pay BHP Billiton, Rio Tinto Group and Teck Resources around $200 a tonne for a three month contract beginning 1 April 2010. That’s a 55 per cent increase over the 2009/10price. Previous contracts have run for one year’s duration.


In a presentation to a coal industry conference, Tony Macko, Centennial’s general manager of corporate affairs said he expects a recovery in demand for metallurgical coal to drive the contract price increase for the Japanese fiscal second quarter commencing 1 July 2010. This is on the back of an increase in global steel demand.


Centennial said that China is expected to remain a net importer of thermal coal, used to fuel electrical power stations to remain tight after bad weather caused cuts in production in Queensland and Indonesia and impacted on export shipping times.

Centennial said there are more than 60 export vessels queued at the Dalrymple Bay and Hay Point coal terminals in central Queensland.

Australian To Introduce New Tax On Miners

Mining Companies To Pay Extra 40 Per Cent Tax

The Australian government is proposing a new 40 per cent tax on the profits of resource companies.

Shares in mining companies fell after Prime Minister Kevin Rudd announced on Sunday that the tax would be introduced in 2012, raising $A9 billion a year in government revenue. The income would be used to finance economic reforms and would shore up state retirement pensions. In return corporation tax would be cut from 30 per cent 28 per cent.

Profits in mining companies have boomed in recent years on the back of increased demand from China and India.

Shares in mining companies fell sharply on the Australian Stock Exchange. BHP Billiton fell 3 per cent while Rio Tinto shares fell 4.3 per cent. Analysts suggested that the new tax could scupper plans by the two companies to controversially merge their iron ore operations in the Pilbara region of Western Australia.

BHP Billiton said the measure would raise the total effective tax rate on the company's profits from 43 percent to 57 percent.

"These proposals seriously threaten Australia's competitiveness, jeopardize future investments and will adversely impact on the future wealth and standard of living of all Australians," BHP Billiton chief executive Marius Kloppers said in a statement.

BHP Billiton’s profits were $6.14 billion for the six months ending 31 December 2009, more than double that of a year earlier.

Rio Tinto's Australian managing director David Peever said the new tax would make the Australian mining industry the highest taxed in the world and less competitive.

Rio Tinto’s profits were $4.9 billion for 2009, up 33 percent over the previous year.

Mr Peever said Australia had been kept out of recession by the strength of its mining sector.

"But the same industry is now being portrayed by the government as not paying its way," he said in a statement.

The opposition Liberal Party said the move could kill Australia’s mining boom.

African Minerals Announces Greater Iron Ore Reserves At Tonkolili

African Minerals has announced that the total JORC-compliant iron ore mineral resource at its Tonkolili project in Sierra Leone has grown to 10.5 billion tonnes. The company claims it is world's largest reported JORC compliant magnetite iron ore mineral resource. 9.7 billion tonnes of the JORC-compliant mineral resource has an average in-situ grade of 30.1% iron, with the remaining 0.8 billion tonnes grading 16.8% iron.

The company has also announced the placing of £80 million with institutional investors for the Phase 1 Hematite Development and Production Project.

Negotiations are ongoing with the China Railway Materials Commercial Corporation and African Minerals expects to execute definitive agreements with CRM in the next month for long term iron ore off-take, an investment by CRM and the procurement of equipment and services relating to the Project.

Production of Phase 1 Hematite iron ore is expected to commence in Q1 2011.