Aberpergwm on target to double coal production this year

THE company which owns Aberpergwm mine says it is “on track” to double coal production from the site by the end of the financial year. However company, Western Coal, made a loss of approximately £490,000 on mining operations in the last quarter of 2010 as a result of work to expand the underground mine.

The Canadian mining firm announced in its latest quarterly results that it expects production for the year ending March 31 (fiscal 2011) to reach 200,000 tonnes at the Neath Valley mine, a 100% increase on the previous year. Aberpergwm is the company’s only mine in the UK and was previously owned by Energybuild. Western Coal bought a controlling interest in Energybuild in July 2009 and acquired the remaining shares in August last year.

Western Coal is based in Vancouver and operates three mines in British Columbia and four in West Virginia in the United States. The company says it is “on track” to achieve its production target of 6.1 million tonnes from all eight mines, an increase of 91% from 3.2 million tonnes in fiscal 2010. Its three-year organic growth strategy is to increase global production by 212% to 10 million tonnes by fiscal 2013.

Production at Aberpergwm for the three months to December 31 hit 48,000 tonnes, up from 44,000 tonnes for the equivalent period in 2009, with sales reaching 52,000 tonnes compared to 42,000 tonnes in 2009. However, revenues from the Glynneath drift mine were $C2.5m (£1.6m at current rates) compared to $C4.1m (£2.5m) in the third quarter of 2009, a decrease of 37%.

Western Coal attributed the fall to a lower realised price for coal. Prices per tonne of coal sold from the mine fell from £55 in the third quarter of 2009 to £31 in the last three months of 2010. “The lower realised price principally reflects the transition of the underground mine into an expansion project during the quarter, which contributed to a lower average quality of coal being produced,” the company’s statement said.

The cost of coal sold from the mine fell 13% from the third quarter of 2009 to the same period last year, as a result of increased production. For the nine months to December 31, however, the cost of coal sold rose 22% per tonne due to increased costs at the underground mine.

The company said in its statement: “The underground mine is still in the expansion phase and its production costs are expected to fluctuate depending on tonnes produced during each phase of development. The current reported unit costs are not reflective of the expected long-term costs of the operation.” Aberpergwm produces mostly premium-quality anthracite coal which is supplied to the Corus steel works at Port Talbot and Aberthaw power station.

In an interview with the Western Mail last August, Western Coal chief executive said he saw a 20-year future for the mine, which has a proven coal reserve of 6.8 million tonnes and an estimated recoverable resource of 36.9 million tonnes. The company is expected to announce its plans for the future development of the mine within the next few months. Overall Western Coal saw a net decline in income in the third quarter of 2010 to $C20m, down from $C24m a year before, on revenues of $C170m. The company attributed the decline to the strengthening of the Canadian dollar against the US dollar, and operational delays at its shipping terminals.

Coal from Aberpergwm accounts for 3% of Western Coal’s entire production. Western Coal is in the process of being acquired by Walter Energy, a US-based coal producer. Sources by walesonline

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