Coal & Allied Fiscal Year Revenue Down 10% On Year, Profit Cushioned By Divestments

Revenues at Australia's largest pure-play coal producer Coal & Allied Industries Ltd. (CNA.AU) fell 10% during 2010 but profits were cushioned by the sale of A$337 million of projects to Whitehaven Coal Ltd. (WHC.AU) and Aston Resources Ltd. (AZT.AU), the miner said Thursday.

Net profit rose 20% to A$704 million in 2010 from A$586 million in 2009, but excluding the sales of the Maules Creek and Vickery mines the figure fell 37% to A$387 million, Coal & Allied said.

The ASX-listed company is a subsidiary of Rio Tinto Ltd. (RIO) and one of the largest producers in the Hunter Valley region supplying Newcastle, the world's busiest coaling port, with 25.3 million metric tons of production in 2010.

Managing Director Bill Champion said that a stronger Australian dollar and a higher proportion of waste material at mine sites had eaten away at profits despite improvements in the price of U.S. dollar-denominated thermal and semi-soft coking coal.

"We expect markets for thermal and semi-soft coking coal to continue to remain strong in 2011, particularly in light of widespread industry supply constraints following recent floods in Queensland," he said.

The miner shifted production from the thermal coal used in power stations to semi-soft coking coal, a variety used either for electricity production or as a low-grade coal in blast furnaces, with semi-soft production rising to 22% from 20% of the total.

"We expect markets for thermal and semi-soft coking coal to remain strong in 2011, particularly in light of widespread industry supply constraints following recent floods in Queensland," Champion said.

In a separate report, Coal and Allied said that coal resources--a measure of total minerals in the ground--fell 28% to 3.54 billion tons in 2010 from 4.92 billion tons at the end of 2009, although roughly half of that fall came from the sale of the Maules Creek and Vickery mines.

Coal reserves--the part of the coal resource reckoned to be economically recoverable at current prices--fell by 39 million tons from 1.05 million tons to 1.01 million tons, against the 25.3 million tons produced by Coal & Allied during the year.

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]

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