Whitehaven Coal looks to the Bowen Basin for diversification and growth opportunities

Paul Flynn, Managing Director and Chief Executive Officer, Whitehaven Coal

A little over 12 months ago, my contribution to this Yearbook reflected on the opportunities and challenges the industry was encountering, driven in large part by ongoing trade sanctions, labour constraints and the cyclical nature of the industry.

While many of these remain, and likely will for some time, it has been a productive year for Whitehaven Coal. Like many of our peers, we benefitted from high coal prices to deliver a record financial performance in FY23. This helped to provide us with a platform to pursue growth opportunities and deliver on our long-held strategy to diversify our portfolio and geographic exposures.

Daunia and Blackwater mine acquisitions

Announced in October 2023, our acquisition of the Daunia and Blackwater metallurgical coal mines in the Bowen Basin marks a significant milestone for Whitehaven and reflects our commitment to evolving the business to align with changing market demands.

Whitehaven has a long and proud history of producing premium-quality coal in the Gunnedah Basin in Northern NSW and we are excited to bring our track record of safe, sustainable operations and long-term community investment to Queensland.

The opportunity to acquire both the Daunia and Blackwater mines will enable us to transform Whitehaven into a metallurgical coal producer, doubling our saleable production and opening the door to new and critical market segments across Asia where demand for both metallurgical and thermal coal will continue for decades to come.

Against a backdrop of ongoing geopolitical issues, economic headwinds and energy transition challenges, our industry has continued to demonstrate the important role it plays in supporting our communities and our customers.

In addition to being the largest acquisition in our corporate history, the deal represents our biggest investment in Queensland and takes Whitehaven from a company that is developing in the Bowen Basin (via our Winchester South Project) to one that will be immediately operational from financial close.

The Bowen Basin is a globally-renowned coal region with a rich history and a proud record of innovation. We are thrilled to be establishing a larger local presence, and we look forward to greater opportunities to engage and share expertise with our industry peers in years to come.

Diversifying risk and operations

In making the decision to acquire Daunia and Blackwater, Whitehaven conducted extensive due diligence, assessing alternative capital allocation opportunities and strategic growth options. Ultimately, we determined the acquisition provided a unique opportunity to accelerate our growth while diversifying and de-risking our business.

In light of the challenges our industry has and will continue to face, the need to consider greater diversification is becoming an increasingly prominent discussion among Boards and management teams looking to shore up their operational longevity and buttress against exogenous factors as much as possible.

The acquisition of Daunia and Blackwater achieves this, providing Whitehaven with greater exposure to long-life, metallurgical coal assets with attractive cost profiles. It will diversify our customer concentration and reduce risk as we expand outside of a single coal basin and a single port, with our operations to increase from four to six operating mines and our exports to be spread across three ports, as opposed to one.

However, perhaps the most compelling element of the transaction is how it will diversify our product offering. Both Daunia and Blackwater will enable Whitehaven to supply high-quality metallurgical coal to high-growth market segments and gain greater exposure to the stronger pricing currently being experienced.

This repositioning in our portfolio will see us produce approximately 70% metallurgical coal, compared to our 10-year average of 17%.

With Wood Mackenzie forecasting high demand for metallurgical coal across Asia, including in India and Southeast Asia, where population growth and economic development are expected to drive strong demand for steel production and metallurgical coal through to at least 2050, the deal will ensure Whitehaven is well placed to cater for the region’s industrial and economic development.

Bringing our community focus to the Bowen Basin

As a business, Whitehaven has a track record of delivering growth through acquisitions, meaning we have the expertise and experience to integrate these assets and deliver meaningful benefits to our communities and industry.

Daunia and Blackwater will bolster our existing operations and open up further opportunities for job creation, partnerships with local suppliers, and direct investment in local organisations and community groups.

Whitehaven understands the importance of mining to regional areas, and we are proud of the role we play in supporting our local communities in NSW, where 75% of our 2,750-strong workforce is based in the towns surrounding our operations, 10.5% of our workforce identify as Aboriginal or Torres Strait Islanders. Our commitment to local environmental management saw us record zero environmental enforceable actions in FY23.

In the same period, we paid $266 million in wages and salaries, spent $357 million with regional suppliers and contributed $4.35 million in corporate community partnerships and donations to local organisations. Our long-held approach has been that local communities should be the main beneficiaries of our presence, and these numbers reflect our success in achieving this in Gunnedah and Northern NSW.

Whether it’s investing in local jobs and procurement, empowering Aboriginal and Torres Strait Islander people, or creating training and development opportunities for the local workforce, this local focus is part of our DNA, and we are excited and committed to creating and maintaining a positive economic and social presence for the local communities around Daunia and Blackwater.

We know the local teams will be a fantastic addition to the company and we look forward to welcoming them to the Whitehaven family.

As we look to the future, we’re excited by the opportunity to evolve our business and tap into the expertise that exists across Daunia, Blackwater and the broader industry in the Bowen Basin.

We’re grateful for the positive reception we’ve received in the region to date. We look forward to working together to continue building on coal mining’s long history and positive legacy in the Bowen Basin’s communities. 