Whitehaven Coal Ltd

ASX:WHC

Earnings Call Transcript 2018-Q3

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Whitehaven Coal Quarterly Report Investor Briefing. [Operator Instructions] Please note that this conference is being recorded today, Tuesday, the 17th of April 2018. I would now like to hand the conference over to your speaker today, Mr. Paul Flynn, CEO and Managing Director. Thank you, sir. Please go ahead.

[Paul J. Flynn, MD, CEO & Director]

Good morning, everyone. Thank you, operator, and welcome to the quarterly report for March 2018. As usual, I'll just go through the report quickly and get ourselves into Q&A as soon as possible.So for our March quarter, we're certainly experiencing a solid quarter, which is nice to see. As you usually see with us, there's a weighting to the second half of the financial year compared to the first. So I'll just go through the highlights quickly.Safety has been tremendous. We have recorded a company record of 5.51 with our TRIFR, and I'll come to that a bit later, but certainly very solid performance, especially with increased production. ROM coal for the quarter at 5.9 million tonnes, up 4% period-on-period, which is a very solid outcome. Saleable coal production at 5.2 million, up 3% correspondingly. Coal sales, including our purchased coal, of 5.4 million is about 10% up on the previous period. Maules Creek, we'll talk in more detail, but certainly running very well. ROM coal at 2.9 million, saleable coal at 2.7 million tonnes for the quarter. Certainly, Maules hitting its straps now. We have seen 1 million tonne month, and certainly, we'd expect to see more of those as we continue this momentum into this last quarter. Gunnedah open cuts certainly have been delivering very solid performance that we'll talk about in more detail and, certainly, from a cost perspective, also have been very, very good. During the course of the quarter, we did -- we have agreed to acquire Rio Tinto's 75% share of the Winchester South met coal project in the Bowen Basin for $200 million, which is very positive. And, of course, during the course over the quarter, we paid our interim dividend of $0.13 per share, with a total of $129 million paid out to shareholders.Over on Page 2, just to quickly go through our managed production and sales highlights. The managed coal production, as I said, 5.91 versus 5.68, 4% up. Total is at 17 versus 16.6, about 3% up. The saleable coal production, 5.24 versus 5.1, 3% up. And at 16.1, compares favorably by 5% to the previous corresponding year-to-date number. Managed total coal sales at 5.4 versus 4.9, 10% up. And our total for the year, as you can see, at 17.28 versus 15.2, some 14% up on the previous year-to-date number of the previous corresponding period.Safety, as I say, has been going very well, but I don't really want to get too excited about our record, although it's very satisfying to achieve that, especially with volume ramping up. But as you know, it's something that we continually play out an increasing effort to as our business grows. We've got more people on the ground. We've got new people joining our business on a daily basis that requires lots of training, particularly for [ green skins ] joining the industry. So to be able to do that given the proportion of new people going joining our industry, it is very gratifying. But, of course, we need to continue to maintain that focus if we want to continue to grow our business for the long term.Coal sales and pricing. As I said, 5.4 million tonnes for the quarter for -- including our purchased coal sales of 10% up on the previous corresponding period, was a pretty good result. The March quarter, I suppose, now, we've had a couple of quarters now looking at these, the amalgam of indices that I used for the price settlements. Now there's no doubt there's probably turning -- was probably a lesser value, so predictive measure than it is really a backward-looking measure over time. But we did see metallurgical coal prices at $237 for the hard, $159 for the low-vol PCI and then $150 also, more importantly for us, with our semi-soft coking coal for the quarter. As I say, there's an opacity now unfortunately with the various indices and the weightings that are used for the settlement process and having coming -- the number coming during the course of the quarter, as I say, it's less use for us all as predictive tool. But it is what it is and we'll talk about our realizations very shortly.Maules Creek has been doing very well in terms of achieving an ever-growing premium profile for its thermal coal, which is good, and in this quarter, certainly continues at momentum at 9.6% over and above the average for the Newcastle index price for the period. The table, which we've provided to you last time over a greater number of quarters, in fact, we've narrowed it down a little bit just to show you the fall, but you've got -- we'll continue to provide this for you just as [ pricing ] guidance in terms of what the prices would have prevailed from the various product types that we've been selling, the indices that are relative to and then our realizations as a percentage of that. So as you go through, you can see that there's -- from a realization perspective, the pricing sale for the quarter for $103 for the Newcastle index was certainly very solid. Our realizations, considering all our product types of thermal, approximated the 2%. And as far as the met goes, for our met contract sales, we're about 18% under the average for the -- or the index for the period, $150. And then when you look at our spot sales, we're about 3% less than the average for the spot over that same period.Maules Creek, as I mentioned, continues to perform very well, with extra equipment having arrived on site doing very well in the final fleet factor, the final fleet for the 13 million tonnes arriving during this quarter and next quarter. You will see further production capacity coming on in that new year, but certainly, this year, finishing off with a very strong finish. 2.9 million tonnes, up 11% from the previous corresponding period, is very good. Saleable coal production for the quarter at nearly 2.7 million, 7% up. And coal sales for the quarter at 2.55 million, 16% up on the previous corresponding period.Metallurgical coal sales of 650,000 tonnes for the quarter represents about 25% of total sales of the mine. That has been an improvement on where we've been in the past. The production itself was actually 760,000 tonnes, 29% of total production, both of them improvements on the previous quarters and, certainly, in the mix to achieve our overall target of the 20% to 25% of sales, as we've discussed in the past.Now we are on track to deliver 11 million tonnes [indiscernible] to gain is slightly up on where we'd previously been, which is going to see us -- a big, big remaining quarter, 3 million tonnes thereabouts from Maules, very positive.Narrabri mine. Narrabri, by our standards, has been a little bit underwhelming from where we've been in the past. At March quarter, at 1.22 million, 11% lower than our previous corresponding period, and the saleable coal production for the quarter broadly in line as well at 1.15 million, these coal sales at 1.14 million. Essentially, you can see selling everything that we're producing. As we discussed before, there's some ground condition issues which we've been dealing with over the past quarter, but that has been exacerbated by some mechanical challenges during the course of this quarter in particular. That has -- we've seen some factors just with gearbox and drives on the AFC, and as a result, retreat rates have been slower, and that certainly had an impact on production during this quarter. As a consequence, with that slower retreat rates, we do see that the recommencement in longwall panel 8 is now pushing into the beginning of July, and we certainly expect that probably to be as late as the second week of July now. So that's pushed back a little bit, which is unfortunate. Production guidance for the mine for this year at 6.1 million tonnes to 6.3 million in ROM terms is fine as we've given before. Production guidance at 7.7 million for '19 remains unchanged at this stage, but we will monitor just the change-out process itself, and let's just bear that in mind as we come into the year-end. We'll finish up this panel. And if we get away in the first week or 2 in July, then I don't think there's any real impact there, but we'll just monitor as we go. Roadway development has been solid at 3,679 meters.Gunnedah, as I mentioned earlier, continues to perform very well. And across Tarrawonga, Rocglen, Werris Creek and our rehab program with our reopened Sunnyside mine producing 1.774 million tonnes for the quarter, certainly a solid result, up from 1.69 million for the previous corresponding period. Tarrawonga producing very well at 612,000 tonnes for the quarter. Saleable coal production there at 550,000 tonnes. And sales themselves at 644,000 for the quarter. Rocglen, 340,000 tonnes for the quarter, doing very nicely as well. Plenty of coal uncovered there so we know we'll have a decent quarter at the end of this as well for them. Saleable coal production and sales at 266,000 and 267,000, respectively. Werris has been through its [ pebble ] patch with some of the deepest seams and widest seams uncovered here at 715,000 tonnes for the quarter, a big result. And the saleable coal production there at 538,000 and 462,000, respectively, of coal sales. Sunnyside is going well, but as we've highlighted to everyone, this is really all about rehabilitation and establishing a contemporary example of what rehabilitation looks like in our area. But obviously, in order to do that, we are removing the remaining coal out of Sunnyside in order to close this mine up. During the course of the quarter, we've had 122,000 tonnes of coal extracted. Saleable coal production at 58,000 tonnes. We've sold some on already at 23,000 tonnes for the quarter. But going very well, and look, it is a cash flow-positive exercise, which is good for these prices. But it's really all about establishing, as I say, a rehabilitation -- a temporary rehabilitation example for the community in the Gunnedah region.The Vickery Project continues to proceed. The various studies and aspects of our EIS preparation have been -- are being adjusted for the revisions to the project. Particularly, there has been some new changes to the industrial noise requirements, so that we're building those into not just the fleet requirements but also infrastructure and also the rail corridor itself. Final work on the rail corridor definition and agreements are ongoing, and certainly, we expect that to finalize very shortly for lodgment within this last quarter.Having just spent a week with our board in Tokyo last week, touring customers and investors, I can certainly say that interest in Vickery -- the Vickery Project and the joint venture opportunities that, that represent certainly is front of mind for our Japanese friends. Similarly, Winchester South also was very -- solid interest in that also.The corporate data, as we normally provide, is our hedged position is slightly smaller than what we normally do just because of price contracts rolling off. Now, as I said, the dividend was paid during the quarter at $129 million. We are waiting on final ministerial approval for the transfer to 30% of the Tarrawonga mine acquisition. We do expect that within the next couple of weeks, so that is just a procedural matter. And, of course, we're very pleased to have been able to agree terms with Rio Tinto for the purchase of their 75% interest in the Winchester South project. That does -- the payment for that, the $200 million that we committed there in U.S. dollar terms, is paid in 2 tranches, $150 million on completion and a further $50 million 12 months on from that completion date. Both these sums have been hedged out as you can see there mentioned at 77.3.In terms of coal outlook, the underpinnings, I think, of supply-demand both in thermal and met look pretty solid, and certainly, pricing has been at a multiyear high in recent times from the average of $103, the market's about $10 less than that, but certainly very, very solid numbers. And I think you're starting seeing various houses, including CRU and others, slowly lifting their outlook in terms of where they think the longer-term pricing for thermal will be, but certainly, that's in very positive territory what -- considering where we were 2 short years ago with the outlook at that time. Met coal certainly appeased, but they're also similarly well supported. Discussions in Queensland, obviously, around supply side or infrastructure-related risks, I think, obviously elevate concerns about the tightness of supply and demand. But if you're looking at supply-demand and new supply particularly coming to the market, there's very limited aspects that you can see that are going to change that dynamic. So we feel reasonably confident about where we're heading into for the next few years.Exploration, you may know, has just ticked up slightly, and that's largely work that has gone into Narrabri South tenement and the project that is rolling the Narrabri South exploration license into our plans for our southern panels at Narrabri. So overall, overall a very good quarter. We're pretty pleased with that. That puts us close to our targets for the full year. We will have this to say, we always do a big quarter and a final quarter. But very solid, good pricing. Control of cost has been very good, within our guidance. So we look forward to ending up this year in decent form.With that, we will open up to questions and answers. Thank you. Operator?

[Operator]

[Operator Instructions] Your first question comes from the line of Andrew Hodge from Macquarie.

[Andrew Hodge, Research Analyst]

The first question I want to ask was just about the level of fixed-price contracts, so I just wanted to check to see that comment. Meaning more than that, you will get a fixed price? Or is it more than relating to hedging?

[Paul J. Flynn, MD, CEO & Director]

Well, as -- when we have taken fixed-price contract in the past, we certainly have hedged, and that continues to be the case, Andrew. We do have some Korean sales rolling off, and we haven't been looking to replace those, I have to say. So period-on-period, there's less of that in our mix. And over the last couple of quarters, we have taken the opportunities where some contracts did have a clause and that allowed us to fix some pricing. We did take that opportunity, which has certainly been positive for us. But we haven't been doing the same in more recent times, so that's just a roll-off of those contracts now.

[Andrew Hodge, Research Analyst]

Okay. And more broadly, just wondering about obviously closing on Winchester South in the first half of FY '19. Just kind of wondering about when you'd be able to provide guidance on sort of timetable for like regulatory approval, environmental approval, all that kind of jazz.

[Paul J. Flynn, MD, CEO & Director]

Yes, yes. Thank you. Yes, look, it is a high-level discussion that one at this point in time. We probably got another 4 to 6 months in front of us in terms of even taking ownership of that. It is -- given it is an asset deal, it does take a little bit longer unfortunately than a share deal. So if we assume that there's 6 months to this, in the meantime, we will be gathering together our information, our team to hit the ground running. We think there's probably 18 months ahead of us in an EIS preparation. That's pretty quick. The Queensland government seems to be able to have a facilitation process which supports the proponent through that development process, which looks very good. So we're thinking about 18 months there. There is some drilling required that we'll need to conduct on the ground just to understand product quality and product mix, and that will inform a mining plan that we'll put together as well for that. So I think with that, you've got to think about 18 months. So I think you've got to think 12 to 18 months also for approval. History says it's -- they're probably better at that than New South Wales, so that's positive. So that's 3 years in aggregate before you'd see an approval for the project, which is really relatively short time line to work with considering that we've obviously got Vickery before them. So it actually sits quite nicely for us in that pipeline. And we certainly look forward to getting on the ground and being able to develop our EIS as soon as possible.

[Andrew Hodge, Research Analyst]

But you'd be more than happy to develop -- start developing Vickery now once you have partners and then later on [indiscernible] down the road than do something similar with Winchester South?

[Paul J. Flynn, MD, CEO & Director]

Yes, we do. Yes. I feel very comfortable with that.

[Operator]

The next question comes from the line of James Redfern from Merrill Lynch.

[James Redfern, Vice President]

I was going to ask about Winchester South, but we covered that off so that's good, thank you. But just in terms of the guidance, so saleable coal production guide is unchanged at 20.5 million to 21 million, but the run-rate for year-to-date did decline to 21.5 million tonnes. So just wondering why you didn't feel the need to slightly increase the guidance for the full year given that Narrabri remains unchanged and Maules Creek's performing really well.

[Paul J. Flynn, MD, CEO & Director]

Yes. Thanks, James. Look, I think Narrabri is certainly outperforming a little bit. There's no doubt about that. Narrabri, as we said, underperforming, but Maules is certainly -- Maules -- sorry, Maules is doing well. Overall, I think this last quarter's going to be a chunky one. You can see based on our trajectory. But it is -- but as I say, Narrabri, we're just cautious about finishing up this panel. And I don't think there's any extra volume that's going to come from this panel in this year. Unfortunately, our original plan is we're to see a week or 2 recommencement on longwall panel 8, so it would drag some tonnes into this financial year, but that's not going to happen now. So we are sticking with our guidance, but we certainly think we'll probably be at the top end of where the saleable coal production guidance for the year has been set.

[Operator]

The next question comes from the line of Lyndon Fagan from JPMorgan.

[Lyndon Fagan, Analyst]

Yes, look, just another question on Winchester. Can you talk a bit about the minority holder, whether you've had discussions with [ center ] group, what their intention might be and whether, ultimately, there's an opportunity to get a hold of that stake or see it go to another sort of potentially more aligned party? And, I guess, the next question, I guess, we've all got a feel about the metrics on Winchester, but can you talk specifically about the yield? That was probably the one thing that stood out as being quite low, and I'm guessing that's obviously a Rio Tinto study result. Is there sort of anything that you're seeing that may indicate yields could, in fact, be a bit better than that?

[Paul J. Flynn, MD, CEO & Director]

Yes. Yes. Thanks, Lyndon. Look, just on [ center, ] we can't really speak for their intentions. But for the history of Winchester South, I suppose it's a project which has been sitting there undeveloped for some years, some decades, I have to say. And I know, look, ourselves included, a number of parties have made attempts to try and pull that loose over that period. And yes, my perception of that is that -- and again, it's just -- we can't speak on behalf of [ center ], but my perception of that is that they are a seller. I don't think anyone would conclude that it sits naturally in their business. But it has been a historical position they've had for many, many years. My understanding again is that it's -- it's just my understanding. It's the lack of a market, which could set a value at which they felt comfortable exiting it, was really the challenge. And obviously, the Rio South process has created that market, and we've obviously put down a market evaluation on the table. Look, all I can say is that we have started -- we have formally started that process. There is a preemption right there. And so we'll let that process unfold. Our expectation, our strong desire is obviously consolidate ownership and do the necessary work to add some value to the project, of course, and then consider the options for a joint venture creation at a later date. So, say, during our recent trip in Tokyo, the interest levels were very, very strong. So that bodes well for the future. But this -- a joint venture creation is a couple years off, you'd have to say. In the meantime, we'll get about our work and look at how we're going to add value to the project. The yields, look, the yields, somewhat say that looks pretty conservative based on what you can see around the region. It's a region obviously where there has some pretty serious mines already and good market data in terms of what the yield profile looks like. I think the yield will be a function of the product [ suites ] that one determines. And so our view is get in there, there's plenty of data. I mean, the site's had some 1,100 holes within it, so like Maules Creek before, if you like. Rio had done a very good job in terms of punching holes in the tenements. Having said that, with Maules Creek, we found the coal quality to be better than what it was estimated from the data we've inherited. We'd like to think that, that might be the case here, although we're not banking on it. We've given the data that we've seen already as being relatively conservative. But again, if you want to put more hard coke in it versus semihard, then your yield will come to that lower range. So if you had minded to try and push more the semihard or the semisoft that we know this project can produce, then that will change that yield profile. So I think it's better to leave it conservative as to where it is. And as we do the work ourselves rather than just relying on that information we've acquired or about to acquire, we'll give a Whitehaven view as to where that should be positioned.

[Lyndon Fagan, Analyst]

Just a quick follow-up. So the semihard fraction that you talk about, what sort of achieved pricing would that likely get? Just would it be a small premium to the semisoft price?

[Paul J. Flynn, MD, CEO & Director]

Look, I mean, all question's yet to be determined, I suppose, the answers for which. Then just given that products out of that area, you don't see -- you see plenty of products coming out to the west of it, along the western boundary. So you can infer from that where you think the semihard will go. I think the semihard will go in the 85 percentage area of the hard coke number. If we're looking at it on a high level, perhaps a little more. But I think we really need to get in there, do our own drilling, do our own product testing. We'll come to market with a view as to where we think the product -- what the mix will be and where the product realizations -- price realizations will sit and, obviously, the related yield for the project overall.

[Operator]

The next question comes from the line of Glyn Lawcock from UBS.

[Glyn Lawcock]

Just a couple of quick ones. Just on the pickup in met coal sales in the quarter, could you just talk a bit where that interest is coming from, from a client company or [indiscernible] country-specific matter and sort of your time line to get to 50-50 at Maules Creek? And then just on Vickery, I noticed this EIS submission keeps slipping at March quarter, a quarter ago, now June quarter, yet you still say project startup is post-Maules Creek ramp-up. Just can you sort of qualify the timing? So when you say project startup, are you just saying -- what do you actually mean by project startup? And when do you think Maules Creek now? Is it 13? Because it seems to be, I guess, on your own, but doing better than expected.

[Paul J. Flynn, MD, CEO & Director]

Yes. Yes, thanks, Glyn. I might just deal with that one first. Yes, look, it's a little frustrating, the time line, I have to say, but as I mentioned before in previous calls, there's some optimization going on around the infrastructure, rail corridor in particular. I do feel that, that's come to its -- to a narrowing of points now where this certainly will be concluded very shortly in a positive way, I would say, for the project. So it's been worthwhile taking the extra time and working with the various stakeholders to make sure that we conclude a solution here for infrastructure that's optimal for the project. I have to say, it's the better of the 3, if I'm talking about [ round figures ] particularly the 3 alternatives we had that we pursued, it's the better of all 3. So it's worthwhile taking the time to do that. We haven't been silent or still during this process. While we've been including that, we have been working with the government to keep them abreast to the changes we're making. So they understand what it is we're doing and what -- as a broadbrush, what the EIS will look like. Once we do lodge the project description, the revised project description with this new infrastructure format, the government will give us an updated set of what used to be called the director general's requirements. And so that will take us about a month to turn those around just to make sure that all the aspects of the project that have changed, that they want to see a little bit more of in EIS, have been catered for in the final EIS submission. That's why we're saying it'll come out in this quarter. Yes, like I say, we're a little bit frustrated timing-wise, but I am pleased at the progress that's been making. It's just that when you're dealing with local landholders and so on, you work to their pace, not ours, unfortunately. And that is what it is. And yes, we like for it to happen sooner, but that's where it's going. In terms of…

[Glyn Lawcock]

Paul, how would you then put that in a time line, similar to what you did for Lyndon just before on...

[Paul J. Flynn, MD, CEO & Director]

We're getting to that, Glyn. I was [indiscernible] to that. You're just too quick off the mark. In terms of time line, we still believe, despite the consultation with the government earlier on, it still will take 18 months to go through the federal and state hoops. The state will do most of the heavy lifting, as we said before. The Feds are largely just concerned about water because it does -- the water trigger has come into the base since Vickery was originally submitted and approved. So it does need to go through that. But 18 months is still the right answer there. That says -- our expectation is that we think we could see an answer here late calendar '19. So if you said our target would be to have construction starting early calendar '20, and I think that'll be a good answer from our perspective. We'll use obviously the time not to just shepherd the approval process as we go through that but obviously finalize the detailed design of the site itself, the infrastructure, package it up, as we did with Maules Creek, in a way that we can tender each of these packages out and, at the same time, pursue, as we said, joint venture discussions, with a view to landing them about the same time the approval is, because I know that the various interested parties will want to see a 10-million-tonne approval in hand in order to justify the price that they're going to pay for the equity in the project. So I hope, Glyn Lawcock, that answers [indiscernible].

[Glyn Lawcock]

12 to 18 months of construction?

[Paul J. Flynn, MD, CEO & Director]

I think, look, you'd have to say -- it won't be the same as Maules. Maules was very quick just because we obviously had the various components as the CHPP lane in laydown yard ready to be assembled. Unless we take the decision to do that and have it fabricated ahead of a decision to mine, then it will take 2 years. So you'll see coal within the first 12 months as we did with Maules. So we'll get the rail corridor done quickly. This coal, as you know, sells very well in its ROM state. So we'll configure it so that we can deliver coal as soon as we can from a bypass perspective. It'll take full 2 years to get to full site constructed with a prep plant on the site. A prep plant, as we mentioned before, capable of also dealing with Tarrawonga output as well. In terms of your question about the incremental met coal sales, I mean, we've been talking about incremental sales out of China not being visible for some time. That certainly has changed. So we have seen additional sales happening there. Having said that, the other side of where we're seeing good interest is out of Korea for our met coal sales. So there's been a step-up in our sales penetration into the Korean market as well for the 2 sources.

[Glyn Lawcock]

Okay. And, Paul, just a quick one. Cost, it was $60 in the first half, guidance at $60, with all the pressure in industry still comfortable?

[Paul J. Flynn, MD, CEO & Director]

Yes. Well, I think our guidance is $1 to $2 that we've given in the past, with those various pressures that you're citing and that we're experiencing and that everyone seems to be observing is there. We're within that range of $1 to $2, probably towards the top end of that range, I have to say, but certainly, we're within it, Glyn.

[Operator]

Your next question comes from the line of Paul Young from Deutsche Bank.

[Paul Young, Research Analyst]

Paul, first question's on the localized weighting events at Narrabri. Could you just maybe explain a little bit more, with respect to either fracking-related, have you fracked in the right place? And do you think that you actually have done enough fracking, you understand the conglomerate for the next couple of blocks? That's my first question.

[Paul J. Flynn, MD, CEO & Director]

Yes. Thanks, Paul. I mean, that's a complex question. We've got Jamie here. I know he's itching to weigh in to this discussion in particular. There might be -- the fracking is certainly an interesting component and a lot of work going on in that regard.

[Jamie R. Frankcombe, Executive General Manager of Operations]

The preconditioning, you mean, of the fracking.

[Paul J. Flynn, MD, CEO & Director]

That's it.

[Jamie R. Frankcombe, Executive General Manager of Operations]

Yes. Look, Paul, in answer to your questions, this is a bit of a learning exercise, I guess, on our behalf from block to block. But certainly, when we reviewed the success, you'd have to say, of the preconditioning program in 106 block, we certainly learned from that and we did extend that further in 107, because you may recall that when we came out from under that preconditioned area, we suffered a number of very significant weighting events towards the back end of the block in 106. So in 107, it's behaved a little bit differently. So we've reviewed a number of the assessments that we look at when we're designing that preconditioning program. We certainly will learn from that and apply some of those learnings in 108. But generally, I'd have to say that we're experiencing similar events to what we've experienced in 106. They are very localized. They have been -- some significant, some less so. But, I guess, the other issue that has impacted it at this time is the corresponding issues that we've had with the AFC gearboxes. So when we've had some of the weighting events, the combination, I guess, of not having the full capacity from the AFC to assist us in terms of pulling that material away has compounded that issue. So that's something that we will absolutely get right. It's a mechanical fix. That fix is available to us and will be installed very shortly. But yes, there's some things we need to look at in the next block that we have already identified and we'll be putting in place.

[Paul Young, Research Analyst]

Okay. All right. That's it. That's a good explanation, Jamie. Maybe, Paul, switching to met coal pricing. We have discussion each quarter, but just maybe pure coincidence. For this quarter, if I look at the discount you got versus the quarterly and then discount on spot pricing, actually both exactly $123 a tonne. So I'm just curious about actually the [indiscernible] or footnote about the discount on the quarterly pricing tonnes sold under term contracts. It was USD 123 a tonne. The contract was $150. And so I'm just curious about that discount which increased. Is that due to just carryover tonnage from pricing similar to $126 last quarter? And if so, if not, should we be seeing that discount closing up relative to the benchmark for the June quarter?

[Paul J. Flynn, MD, CEO & Director]

Yes, thanks, Paul. I mean, there should be no coincidence that those calculations stem from that $123, because that is the amalgam of all met coal pricing, be they JSM contracts or spot-related contracts. There's no -- there should be no coincidence there because they're both from that -- they're calculated from that realized position. Look, the spot obviously is closely approximated what the spot has been for the period. Clearly, there's been quite a diversion still, as we've seen in previous quarters, from the spot performance during that quarter versus the benchmark. And as you know, our desire obviously is more benchmark sales into that profile. I think we've been pretty good, say, for instance, though, it's actually Korean tonnes that I mentioned a little bit earlier to Glyn's question. Those tonnes go into the JSM framework, so that's very positive to see more tonnes going into that area. The 18% itself is a catchall which covers not just JSM but then also PCI sales as well. So we do see a little bit -- if we had actually provided more than the -- just the 4 quarters, you would have seen in the previous year, we also had a bit of anomaly [indiscernible] diversion between the prices and the discounts, the 20% -- nearly 30% being experienced in that same period in the previous year. There was a bit of that as well. So 18% in that context does have some precedent, if you like, but that gap has narrowed. But it is, Paul, in the end an amalgam of not just semi sales but also our PCI sales into India.

[Paul Young, Research Analyst]

Yes. Okay. All right. And then just last question on Maules Creek. I mean, it had a great quarter. I mean, part of it was probably because it was pretty dry there during the period. And you said you did run above 1 million tonnes in a month, and yet you don't have the -- I guess, the track fleet operationally. And so it's pretty exciting from a perspective of potential for Maules Creek to, as you say, continue to run above 1 million tonnes. I'm just curious exactly what did it do last month, Paul, on a -- to maybe a couple of decimal places. But how much above 1 million tonnes was it? And what can this mine do then?

[Paul J. Flynn, MD, CEO & Director]

Yes. Look, Paul, just it crept over the 1, so not materially above, but it's nice to see that as a target. As a mine at the 13-million-tonne level, we have to be doing that every month. So it's nice to be able to show the team that, that's certainly achievable when we've got, as you say, the right way the conditions are conducive to us minimizing stoppage times. But yes, look, it's quite exciting without that final leak of capacity commissioned on site. You can see we're doing pretty well. So that's not to say we don't need this last set of equipment, if that's where the question's going to. But it does point to the idea that this level of equipment not just would be obviously sufficient to do 13, but as we've talked about, there's an opportunity here to enlarge, to make the submission for modification for Maules to take it a little bit larger. Jamie?

[Jamie R. Frankcombe, Executive General Manager of Operations]

Yes. Paul, look, once we focus on the coal operations, I guess, the other critical thing is obviously the waste removal activities. And what we are seeing is much more -- and certainly in the month of March, much more consistent weekly performance in that area. We're achieving a 1.3 to sort of 1-point-almost-4 million bcm in a month. So capacity, plus any buildup in blaster inventory, plus 1 other key thing that happened in February for us, is the ability to clear that last section in the waste up that traveling stock route allowed us to free up the corridors, if you like, the haulage roadways out to the waste in placement area, plus a little bit of opportunity for some short tipping in that area to be allowing to bit optimize the truck fleet across the loading end. So all those things announced on to come into play, and then that's why you're seeing that incremental buildup in capacity overall.

[Paul Young, Research Analyst]

Yes, great. Okay, great. Honestly, one more in, please, guys. Just on the record quarterly average premium for Maules Creek of, call it, 10% or USD 10 a tonne. Paul, can you help us out what the split between the ash premium and the energy premium was in dollars term?

[Paul J. Flynn, MD, CEO & Director]

The energy, you can work out for yourself because that's generally 63 over 6,000 tonnes by your price. So that's the variable component of that. The fixed component, as we said in the past, is generally depending on the contracts because we're just generally pushing this over time. So at the moment, we're in the USD 4.50 to USD 5 range, Paul.

[Operator]

There are no further questions at this time. I will now hand back to Paul.

[Paul J. Flynn, MD, CEO & Director]

Thanks, all. Look, it's been a solid quarter. If there's any further questions, thanks very much for your participation. Just obviously, for further questions, Ian or for me or related things through the normal channels, but look forward to this next quarter rounding out a solid year, and we look forward to discussing things with you in more detail over the next coming months. Thanks very much.

[Operator]

That does conclude the conference for today. Thank you for your participation. You may all disconnect.