Whitehaven Coal reported a robust performance in its Q1 2025 earnings call, driven by a significant increase in coal sales and strategic operational improvements. The company highlighted a 22% rise in total equity coal sales, reaching 7.8 million tonnes, and maintained its full-year production guidance. Currently trading at $30.36, the stock has gained 9.45% year-to-date, showing resilience despite potential weather-related challenges ahead. According to InvestingPro analysis, the stock appears to be trading near its Fair Value, with analysts anticipating sales growth in the current year.
Key Takeaways
- Total (EPA:TTEF) equity coal sales increased by 22% to 7.8 million tonnes.
- Revenue was primarily driven by metallurgical coal, accounting for 63% of sales.
- The company maintains its full-year production guidance.
- Operational improvements include enhanced rail logistics and cost reduction initiatives.
- Potential weather impacts could affect future production.
Company Performance
Whitehaven Coal demonstrated strong performance in Q1 2025, with a notable increase in coal sales. The company's focus on optimizing product mix and improving operational efficiency contributed to its robust results, generating an impressive EBITDA of $1.145 billion in the last twelve months. The metallurgical coal market remains undersupplied, with growing demand from India, while the thermal coal market is expected to tighten. For deeper insights into Whitehaven Coal's financial health and detailed analysis, investors can access the comprehensive Pro Research Report available on InvestingPro.
Financial Highlights
- Total equity coal sales: 7.8 million tonnes (22% increase from previous quarter)
- Revenue split: 63% metallurgical coal, 37% thermal coal
- Net debt: AUD 1 billion
- Stamp duty payment for Queensland acquisition: AUD 363 million
- Expected proceeds from joint venture sale: AUD 1.08 billion
Outlook & Guidance
Whitehaven Coal is optimistic about future quarters, expecting improved product realizations and maintaining its full-year guidance. The company anticipates trending towards the top end of its production guidance and continues to focus on cost reduction and operational efficiency. InvestingPro data reveals the company has maintained profitability over the last twelve months with annual revenue of $7.124 billion, while demonstrating historically low price volatility - just two of several key insights available to Pro subscribers.
Executive Commentary
CEO Paul Flynn emphasized the company's positive trajectory, stating, "We're certainly trending in the right direction." He also highlighted the importance of product quality, noting, "Our marketing team has taken a very close look at the product quality specs."
Risks and Challenges
- Potential weather impacts could disrupt production in Q3 and Q4.
- The market for thermal coal may face pricing pressure due to Russian low-quality coal products.
- Delays in the Narrabri longwall changeover could affect production timelines.
- Macroeconomic factors, including demand fluctuations, could impact coal sales.
- Regulatory changes in key markets could pose operational challenges.
Q&A
During the earnings call, analysts inquired about the delays in the Narrabri longwall changeover and the improvements in Queensland rail logistics. The company addressed these concerns, emphasizing its efforts to enhance operational flexibility and product realizations.
Full transcript - Whitehaven Coal Ltd (WHC) Q2 2025:
Paul Flynn, CEO, Whitehaven Coal: Good morning, everybody, and thanks very much for attending today. Welcome all to the Q2 report for our December quarter for FY 2025. I know there's lots of activity in this shortened week for people or groups reporting, so we'll get through our document here as quickly as possible and get to the Q and A. I'm joined here with Kevin Ball (NYSE:BALL), our CFO Ian Humphreys, our COO and our IR team as usual. And let's get through the highlights and move on to the Q and A, as I say.
We're pretty pleased with another solid quarter from our operations right across the board and which really consolidates our position at the end of the first half of the year in what's been a very good start for the business in the 1st full financial year in its enlarged form. So I'll just go through some highlights here. Our safety is decent, but we've got more room to maneuver there at 4.9 for our Trifer. The managed farm production there at 9.7 consistent with where we were in September, as I say, a solid start to the year for the first half. Total equity sales of produced coal at 7,800,000 tonnes.
So we're assuming to be up 20% up on the September quarter. Revenue split for the period, 63,000,000 met coal, 37,000 thermal, come back to that a little bit later. Unit costs are at the bottom of our guidance range, and I'm sure we'll have more discussion on that as well, but doing very nicely there. Net debt there, just for the record there, Aussie, dollars 1,000,000,000 Aussie, but I'll get to that a little bit later as well. And of course, we're anticipating the formation of a joint venture with our incoming joint venture partners there, which would conclude in this quarter, in fact.
So but on track, and I'm sure there'll be further questions on that. Quickly, Queensland, ROM production, 4,600,000 tons, a little down on the September quarter, but just mine planning associated with that. Sales have been strong. And so at 4,600,000 tons for Queensland, 28% up on September. Average realizations there, about 75% of the PLV hard coke price across the 4 products there, Aussie 2.37 per tonne.
And very good productivity moves and certainly cost out initiatives starting to show the benefits in this period. New South Wales across the open cuts has done nicely and now, Roy's volumes are in line with our plan. The ROM totals there at 5,100,000 tonnes, certainly up on September by 17%. Equity sales are going strong at 3.2%, up 15% on September. Average coal price there at 2.11 Aussie per tonne, more or less in line with GCNuke for the quarter.
And so as I say, wrong production across the mines, certainly in line with guidance, if not to the better end of where we've guided you. I'll leave the table there for your digestion, but you can see there pretty quickly that up on the September quarter, in line with our plan. We've done about 19,700,000 tonnes now for the half, puts us in a very good position, and I'm sure you can extrapolate that in terms of where it goes for the full year guidance. Certainly, trending towards the better end of our guidance range, which is nice. As I say, Queensland operations themselves, 4,600,000 tonnes, Certainly, a little bit lower but in line with our sequence and plans, so nothing that we're worried about in that respect.
The sales were strong, and that is a recurring theme across the Queensland business there that the products out of our Queensland operations are well sought after, so sales have been very good. And stocks at a reasonable position at 1.4 at the end of the quarter. So it bodes well for the next. Our cost out initiatives certainly are tracking well. And as we're saying today, we are running at the bottom end of our guidance there.
And so as we get to publishing the half year numbers, you'll see a bit of color there, and we'll speak to a little bit more about how that's tracking, but certainly trending in the right direction. Dorniers had a good quarter, long production at 1,500,000 tonnes despite it's being 7% lower than before, but it's doing very well. So we're very pleased with how Dornier is tracking. And certainly, any issues that we've had in the previous two quarters of our ownership for dysfunction on the rail corridor has been mitigated. And coal availability and just the demand itself has led us to a very positive outcome from the sales perspective for Aldornia.
Blackwater 3.1 was 17 lower than September, but again, just sequencing related matters. We have had some weather, and I'm sure there may be a question or 2 about that. So the rain has certainly been more seasonal but
Ian Humphreys, COO, Whitehaven Coal: not unexpected, but we have been experiencing
Paul Flynn, CEO, Whitehaven Coal: quite a little little lightning in the area as well. So there's some downtime associated with that when it occurs, and we can talk a little bit more about that as well just to give a little bit more color. Glass of inventory levels, as we've spoken about this, one of the things we've inherited that we wanted to overcome in our period of ownership. We have rectified that now. So the team's done a great job to get back on top of that from what we inherited at transition and really does bode well for now reestablishing what we believe to be the pre strip inventory levels necessary to run our 7 drag lines well.
And so that's an important piece of the puzzle now we're on top of. Sales volumes for Blackwater 3.1 were higher by September quarter by some 25%, which is good, but again, good demand for all the 4 products coming out of Queensland. New South Wales, very solid at 5.1 managed ROMs. So that's very positive, 70% up on the previous quarter. So very pleased to see the operations consistently delivering across the business in New South Wales.
All the open cuts were very good. Narrabri had 2 good months, but then we did have some downtime unplanned in the month of December. But Narrabri remains within its guidance its share of the guidance overall, which is very positive. Sales of 4.1%, 17% higher, which is also very positive, and we have closed out with decent stocks as well at 1.3%. As everybody knows, Narrabri does have a change out coming out in the second half.
So the open cuts certainly are weighted a little bit more in half 2, but Narrabri obviously won't be weighted in the same way given that it does have that period and that's required for the change out. So mall has done well. Nice to see that consistently, 2.9 1,000,000 tonnes, 28% above the September quarter. Mine sequencing does have, as I say, a little bit more tonnes coming in the second half of the year, and sales very strong there at 1,900,000 tonnes. Now as I said, we've had some unplanned downtime.
So we've had some defects with chain failure that we're working through in the month of December. That has been replaced, and we're back in the moving again. And looking at just in terms of what we need to do differently, given that we have a change out coming up, and we want to make sure that any quality control matters associated with the train are dealt with as part of this impending barrels and our overall good and 33% up on the September quarter at 1,800,000 tonnes. The Gundara ops doing well. So Tarrawonga at 0.5000000 tonnes, 30 9¢ up on the quarter and Victory itself, 400,000 tonnes doing nicely for the December quarter, obviously an improvement over the previous, but we aren't just that ramp up phase, but having moved past some of this lower productivity over the material that we were working our way through, the coal is starting to emerge nicely there.
So over to the equity coal sales and realized pricing. So the December equity sales of produced coal at 7,800,000 tonnes, 22 percent higher than previously, and the September quarter resulting in 28% increase on Queensland, a 15% increase in New South Wales. The sales mix, as I previously said, 63% revenue from the mix coal side of the business and 37% from the thermal side. And then you've got the repeat of the stats there in terms of the realized pricing for Queensland operations, average price at $2.37 Aussie. And as I mentioned earlier, latest down there is $2.11 for the New South Wales operations.
Overarchingly, met coal products realized $152 relative to the index of 203. And so it's about a 75% yield, if you like, a realization on the PLZ index for the average of the quarter itself. And again, trying to give you some stats that you can use here in terms of the splits of the products, they do vary from quarter to quarter. But and 75 is a little lower than what we would expect generally in the normalized spread of the products across, say, a year. So we actually that's a little low.
So we think it'd be more 79 to 81 in that range, given a normal spread of products of sales during the period. New South Wales, as I mentioned earlier, the 211, is basically at the index for the average of the quarter, and that's what you should see from the New South Wales business. In the absence of more Dickory Tungs coming through, that will actually lift. So your expectation should be GC plus with more Dickory Tungs in the mix. But in its current form at a relatively modest level, running the small version of Dickory, In a flat market, you should get the GC index as an average, and that's certainly what's played out here for realizations for the thermal product of New South Wales.
In terms of the market, the underpinnings of the markets of both sides of our business still remain consistent and positive. Now we do see shortfalls in the production of metallurgical coal given the demand profile that we see both in our markets and for the key markets. And then also India, obviously, as being what would be anticipated to be the growth engine of met coal consumption in our markets. And the thermal coal is the same, undersupplied, underinvested. So we see those dramatically being the same underpinnings of the markets generally.
But in terms of what we've seen in the quarter, the markets have been relatively flat, no doubt about that. And with a little bit uncertainty, obviously, in terms of what China is doing, producing lots of steel. And we can see the Indian customers taking advantage of some of that cheap steel being offered into the market and therefore lower production of their own. Although you can see, I'm sure various comments have been seen about impending restrictions on coke imports into India and therefore stimulating the consumption of their own coke processing on the ground, which will require more inbound metallurgical coal from the seaborne trade. In terms of the thermal side of business, markets have been good and consistent, although albeit well supplied.
All our good customers are taking their coal and margins sorry, our premiums are consistent across the market as well, which is very positive. But the market is well supplied, and you've seen it tick down since the closure of this quarter. And so we sit there. But as you've seen in the past, it doesn't stay there for very long. So we expect that certainly to tighten up.
And with a colder winter being experienced than what we've seen in the last couple of winters, expect that to draw down inventory levels and put some tightening back into both sides of the business once that resumes. Production costs, as I mentioned, are tracking nicely. So we are at the bottom of that range, which is very positive. I'd say in a few weeks' time, we'll release our half year results, and you'll see that. And we'll give you some more detail in terms of what we're seeing on that.
But certainly, the cost out initiatives that have been taking place and the shaping of the Queensland business, which is more focused on where we think it should be under Whitehaven ownership and management, that is yielding benefits. And of course, coupled with that, the productivity gains that we've seen at both the Queensland sites. And quite frankly, New South Wales is also doing well in that regard. So nice productivity benefits being seen across the board there, but for the bumpy December that we saw from Narrabri. I won't worry about too much about the net debt other than just to say we have, after disclosure of the quarter, a couple of days later, paid the stamp duty on our Queensland acquisition.
So as much as that hurts, the Queensland government will definitely benefit from $363,000,000 appearing in their wallet to their benefit. So that's annoying, but it is where it is. The JV, all the conditions, precedent for the JV are tracking nicely. So we feel pretty confident about the closure of the formation of the joint venture and the closure of the deal, including the $1,080,000,000 to be paid to us as a result of the sale of 30% of Blackwater. So we feel that's tracking nicely, and we'll keep making sure and staying on top of it just to ensure that we do have closure of that on a timely basis.
But as you know, not all of it is under our control, but the necessary piece of the puzzles are falling into line as we would expect it to be. For your information, there is just the analysis that we've given you over the last quarter or 2, the expectations that we have, which will be subject to verification of the contingent payments to BMA as part of the transaction. Now that with the average price slightly less than what it was in the past, so our expectations are of what we will need to pay are moderating. So that system in terms of upside and downside sharing is working. And our estimate at the end of the quarter, 33%, although if prices continue to be the way they are, we think that will soften a little further as it comes to the closure of the 1st year of our ownership.
And there's a few comments there for development projects exploration. I won't go into anything particular there because there's nothing that I really feel that we need to draw to your attention on the projects as such. Guidance remains well positioned and consistent and unchanged. As I said earlier, you could see where the managed wrong production is going, the sales are all trending towards the nice end of the guidance scale. And in the case of our costs, well down at the bottom end of the scale.
And as we say, you'll see that for half year numbers in a few weeks' time. So other than that, I think we'll just close the discussion for highlights and move over to the Q and A session. So I know that there's plenty of other companies reporting this short week. So let's get into that, and hopefully, we'll answer all the questions that you have for us. Thanks very much, operator.
Conference Operator: Thank you. Thank you, sell side analysts. Your first question comes from Rahul Anand from Morgan Stanley (NYSE:MS).
Ian Humphreys, COO, Whitehaven Coal: Two questions from me. Firstly, the Narrabri longwall changeover. My understanding was that the changeover or rather the resurface of the longwall and the longwall move was going to happen during this quarter. Obviously, now you're talking about a push into February. Just wanted to understand some of the drivers there.
And if you can overlay that with perhaps the asset health, obviously, you had an AFC chain failure also back in March. And there are considerations still to extend that longwall life. So how are you seeing that? That will be great. That's the first one.
And then the second, just on Queensland. You've talked about optimization of rail logistics. So where are you seeing the constraints in the system now? And if you can help us understand sort of how that's progressing alongside the weather impacts? That's the second one.
Paul Flynn, CEO, Whitehaven Coal: Yes. Thanks, Raul. Narabra, first, I'll make a few remarks and then Ian, I'm sure, will want to contribute a bit more color. You're right, in good memory, Narabra has had a few chain related interruptions. And so we are investigating what we believe to be some nuances here in terms of quality control, and that feedback has been passed back to the suppliers.
So yes, we were cutting nicely 1st 2 months of the quarter, then December had some interruptions. And of course, as you know, when you have an interruption and it goes on for a little bit, you are susceptible to a bit of roof instability if you stop. And so there's been a bit of that, which is annoying. The chain has been replaced, and so we're moving on, which is nice. But as I say, there are some learnings we think that need to be taken up as part of the change out.
Now I think your comments just about change out timing, I think just to complete what you were saying there is that we were expecting to have the change out appear entirely within Q3. Now given the delays in starting it, it will migrate a little into Q4 in terms of the total change out period. So if we're not starting, if we're not starting until the end of Feb, say for instance, then yes, of course, it's going to straddle the end of Q3, start of Q4. But our numbers still remain within our guidance range. So we're okay with that.
It's just, it is a little annoying, I have to say. And then, of course, there's the refurb and work that we're going to do on the longwall itself as part of the change out remains the same. So anything else you want to throw into that? I think just on the change out, we've had to change the first one out, which was a little bit premature. And the nature of these changes is quite a long delivery time.
So the one that we had in order was effectively the same as the previous one. And we ran that through expecting to see it get to the end of the block. But as Paul indicated, just prior to sort of the end of the year, we had a couple of failures there. And I guess we elected that it would be a smoother run to change that out. The chain that we have put on there is a change of chain, both from a material type and also a design type.
So I guess we look forward to seeing how this one performs. And there is a body of work going on in the background in and around the assessment of the chain, the 2 that failed that we've historically used. And Raul, just on your Queensland question. We are certainly receiving better service through the network. There's no doubt about that.
So that's nice to be able to say to you. And that means the allocation of pathways to us in line with our contract. And so that's improved our lot out of Dornier significantly. And because you can see the production has been pretty healthy relative to where it's been historically, that means we've got plenty of coal to keep up to the prep plant and therefore product to go on the trains and utilize them. So our challenge here, I mentioned before that we were using 3rd parties to complement or to cover the shortfall where we weren't getting the pathways that we wanted.
We are winding that back now, which is good. So that should bring a cost benefit associated with it as well because we're, our objective here is to just get back to the contracted parts that we have and the functional operation of that contract. But that doesn't mean from time to time, we aren't going to use ad hoc pathways because there is some flexibility that's useful in doing that, particularly where we where, as I say, we've been producing very well. And if we need an extra pathway or 2 to get a bit more coal down the line and there's an opportunity to do that, we will use those ad hoc pathways as required. But yes, look, it's the performance of the network is better.
There's no doubt about that.
Ian Humphreys, COO, Whitehaven Coal: Just before you go on to the weather, Paul, in terms of the ad hoc pathways, if we do exclude them, where do you think the constraints are in the system? And are you getting everything you've signed up for now? Or we're going to see a bit of variability in that continuing?
Paul Flynn, CEO, Whitehaven Coal: Yes. Look, I think that system, the Goonyella system, always, it is a busy system. And some might argue that it's over contracted. But you're always going to have a bit of ebb and flow associated with the other mines proximate to us who are trying to get their product to market, particularly at either full year or half year times, depending on what your financial year end is. There's always a bit of compression there in the same way that we see New South Wales.
But the key difference for us in terms of how these two systems function is New South Wales has HVCCC and Queensland doesn't have the equivalent coordinating authority that all the suppliers subscribe to. So it's a little bit more get in there and defend yourself. And whereas New South Wales has a different setup, which works for us.
Ian Humphreys, COO, Whitehaven Coal: So weather Okay. And just finally on the weather?
Paul Flynn, CEO, Whitehaven Coal: Yes, weather, look, we've had some rain, but that's sort of more or less in line with rainfall predictions. So we're not really too out of shape about that. But we have had quite a bit of lightning. So there's some nuance here in terms of what lightning means for us. And it's a little complex, but it goes back to that predates our ownership.
And so there's just an interaction with the regulator, and we need to get some clarity for us as Whitehaven as opposed to VMA was talking to the regulator about various arrangements as to how they could operate for how long in circumstances where there was lining in the area. And BMA had put in place some measures to be able to manage that so that they could run for longer. And now that these two mines are separated from BMA, there's a little bit of clunkiness in terms of whether or not those concessions or initiatives are being conferred on us. And the answer to that is not quite yet. And so we are suffering a little bit from just lightning being in the region and us having to stop earlier than we think is necessary given that those initiatives are being have been transferred to us.
We are operating the same way as what BMA was continuing to do in those circumstances. But there's some paperwork that needs to be put in our name in order to allow us to run under those conditions. I think that's
Kevin Ball, CFO, Whitehaven Coal: Yes. I think I get
Paul Flynn, CEO, Whitehaven Coal: a pretty good summary, Paul. I mean, but we envisage, hopefully, over the next 2 to 3 weeks, there's been some movement in that space, and we're working with the regulator. And we should be able to get back to how they used to work the sites, in particular Blackwater, prior to the directives being placed that we inherited effectively.
Ian Humphreys, COO, Whitehaven Coal: Got it. Okay. So it's very short term. You're envisioning only 2
Paul Flynn, CEO, Whitehaven Coal: to 3 weeks. So that's pretty clear. Couple of weeks to the solution. It's been 3 quarters now of our ownership, but yes.
Conference Operator: I guess. Your next question comes from Paul Young from Goldman Sachs (NYSE:GS).
Paul Young, Analyst, Goldman Sachs: Paul, first point, just overall just guidance there for the full year. And great to see the conviction that you can actually hit the top end. But I think the second half does imply that your repeat run on mine coal production will be just a repeat of the first half. So I understand you had the impacts from widening and actually some of your peers called out the same thing in the Southern balance, so it's consistent. But where this typically in Queensland is more sort of February, March, April.
Ian Humphreys, COO, Whitehaven Coal: So I'm just curious about what gives you
Paul Young, Analyst, Goldman Sachs: the conviction around that second half will be a repeat of the first half? Is it to do with the fact that your blasted waste stocks are higher and also you're getting those, a couple of new, I think it's excavators or shovels in the door this half?
Paul Flynn, CEO, Whitehaven Coal: Yes. Paul, there's lots in that. Look, our conviction is obviously to push as hard as we could in the first half, knowing that, as you say, history says there's a bit of weather in Q3 in particular and some in Q4, although Q2 is not immune. And looking back at all the analysis over the many years of weather up there, what we're seeing, as I said, at the moment, as you say, others have called about, is reflective of history there and nothing more. So productivity is improving.
So we're doing better along the way. As you say, we have the extra moving capacity in place, which is now on the ground and doing what it should, which is good. And as Iain just covered off in terms of the lightning, if we can move for longer rather than what we're being subjected to at the current situation, then we'll be able to make sure that we've derisked to some degree the second half's earnings. Now Dornier is obviously a different beast as well because being fully autonomous, there's different arrangements that can apply in there. We can run we run longer with the autonomous trucks when it starts to get wet.
So there should be an opportunity in all of that as well versus demand. But the weather is being factored into our plans, and we feel pretty good that we're certainly trending in the right direction. Like I say, it's we're going to be in the better end of our guidance based on what we say today. But if there's 5 cyclones in Q3 rather than Q3 or whatever the number might be, then that is a variable which we everyone in Queensland has got to live with. And but based on what we're seeing today, we feel pretty good about it.
Paul Young, Analyst, Goldman Sachs: Yes. No problem, Paul. And just a second one on thermal coal realizations. I know you called out, Vikram, what did you get? But just I thought that might have been a little bit better considering that Creek volumes have all been sold and malls did reasonably well against a decent premium on both Dash and Energy.
So can you just is there anything else to highlight just on the quarter out why your realizations were in line with the mix?
Paul Flynn, CEO, Whitehaven Coal: No, look, I think we repeatedly said to you that in a flat market, that's where we should be. There's no doubt that the trade, if I can call it that, swapping out worse for Vickery is a positive trade from a realization perspective, no doubt about that. But you're not seeing the full impact on the sales side of things quite yet. And so the sales of Vickery have been relatively modest in terms of the mix. But you will see that play out a little bit further in quarters to come, and that should improve it.
And the other challenge here is when you've got narrow dry tons, narrow dry tons, obviously, inherently just under the GC level. So to the extent that you're making sales of it as a standalone product rather than a blended product through group contracts, then that is sub GC realizations relative to the premiums that malls and Tarawonga and Vickery achieve. And so I expect this to moderate in a positive way and improve, I should say, as more Vickery tonnes manifest themselves in the sales mix. And as I say, those tonnes out of Vickery came relatively late in the period. So you can see that the stock build in New South Wales reflects the fact that there's better quality tonnes sitting on the product stockpile there as well.
Conference Operator: Your next question comes from Jonathan Sharpe from CLSA.
Paul Flynn, CEO, Whitehaven Coal: Yes, morning, Paul, Kevin and Ian. Just the first question on Queensland price realization. So it looks like there was a 10% variance with the met coal price up there that you realized compared to consensus. Consensus was a bit higher. Can you just give us some details on why this would be so?
What are we missing? Was it driven by product mix or something else? Yes. Thanks, Jonathan. I think the challenge here with quarters is looking at it on a quarterly basis, there's a very short term horizon.
And so we feel like that should be a little bit higher, as I mentioned to you before. There's certainly late 70s is where we think it should be through to early 80s. And so the 'seventy nine to 'eighty one is where I think it goes over at least an annual period. But yes, you will get product mix differences quarter to quarter, no doubt about that. And more importantly, the spread between the various products changes on a relatively short term basis.
So that also is playing out in the 75% that we've you. So year to date, the number is obviously higher, reflecting the Q1 being better. But we think that continues to moderate. So I tend not to try and look at it too much on a quarter by quarter basis. And we're generally not encouraging people generally to be banking on that on a quarter by quarter basis.
We're encouraging, obviously, investors to stay longer so that they can see these things play out on a longer term basis. But no, it's just mix. It's just mix and the spread jumping around a little bit from quarter to quarter, nothing else that we should be concerned about the product. The product the interest in the products has actually been very good. And so incremental sales have been very easy to come by, not because we're offering them at substantial discounts or anything like that.
They're actually pretty good pricing that we're seeing. And our marketing team, I mentioned last quarter, our marketing team has taken a very close look at the product quality specs that the products are being offered into the marketplace. And we will be pushing an improved specification as the official position for these products in this coming quarter. So I mentioned that last quarter, that's certainly the case. And obviously, that's no new news to people who like the product, and you can sort of understand why they like it so much because they probably were getting it, a better product than what they were paying for.
But for new customers, with the republished specs on these products, we'll be driving the realization question northward, that's for sure. Okay. Thanks, Paul. That's clear. And just another question on weather.
Just interested in how the weather has been in January, given this quarter is historically the lowest rum production in Queensland. And I think it's well known that this quarter is the lowest. And just also consensus currently has Q3 production to be higher than Q4, at least at Blackwater. So would you expect that? Or is there any reason for this?
Or are you expecting Q4 to be higher? Well, I'll have Ian talk through the weather. But as to why consensus would be doing that, I don't know because given that you just said that it's well known that Q3 is generally the one that sees the most weather impacts. And on top of that, we haven't been giving a sculpted guidance range quarter to quarter. So while the consensus will be doing that, I'll leave that for you all collectively to work through.
And weather? I think, as you touched on before, Paul, I mean, the forecasts we do are based on predicted delays on a monthly basis on historical. So that is factored into it. I mean, we are seeing probably a similar rain to lightning delay ratio in January that we saw in December at Blackwater. As you said, I mean, average rainfall of about 100,000,000 was seen, and that was expected.
So yes, I mean, I think it will come out in the wash as we expect. Yes. No worries. Thanks, Paul. Thanks, Kevin.
I'll leave you there.
Conference Operator: Thank you. Your next question comes from Lyndon Fagan from JPMorgan (NYSE:JPM). Please go ahead.
Lyndon Fagan, Analyst, JPMorgan: Good morning, everyone. Paul, just to pick up on your comments around improved products back in Queensland. Can you talk about how material that might be to price realizations? Obviously, 79% year to date, you said that is likely to fade, I. E, we're in the mid-70s, somewhere below that for the rest of the year.
But how does this evolve over the medium term?
Paul Flynn, CEO, Whitehaven Coal: Yes. Look, I think at the half year, I think we'll talk a little bit further about this. So we firmed up. We've certainly been quality checking, if you like, all the 4 products coming out of the Queensland mines. And certainly, Dornier is the specs are materially better than what we've inherited.
And we also feel that the at Dornier, in particular, the split of products is probably that we've given you originally with the acquisition split is probably very conservative. And that's certainly been the interest levels in the product have been very good, and I expect that split to change. And so the sort of 65% to 70% type mix that we gave you at the original at the outset of the announcement of the acquisition, I think, will be proven to be conservative. So as I mentioned before, though, Lindon, for customers who've been long standing consumers of this product, they know exactly what they're getting. Why they were charged a certain way, that's a question for somebody else and probably no longer relevant.
What we charge will be up to us. And so we've inherited contracts which are based a certain way, but our contract negotiations as inherited contracts roll off, we'll be focused on drifting that up. Now for a customer who's been using that product for years, they know exactly what they've got. Whether or not they think they've got it cheaper or not is a separate question, but you can't miraculously say to them, okay, it's now this. And but you can push it up.
Whereas new customers, I think the opportunity is there to actually position the product properly and drive the realizations upwards. And the same applies to the semi hard for sure at Blackwater as well. That certainly has been conservatively positioned. And we feel that there is the potential for value leakage there. And so we've as I say, we'll be publicizing the repositioned specs to our customers in this quarter and expecting to obviously start a conversation with renewals and new customers with a different spec sheet on the table.
So we do think that will improve the realizations going forward.
Lyndon Fagan, Analyst, JPMorgan: Sounds good. The other one I had was just on the unit costs. Obviously, pleasing to see it tracking again at the lower end of guidance. Is there any color you're able to share on how that looks at a regional basis, I. E, Queensland v.
New South Wales? Yes.
Paul Flynn, CEO, Whitehaven Coal: Linda, we'll keep it at a group level. I think it's the easiest way to deal with it. All the sites are doing well in that regard. So it's, as I say, Moore Street productivity looking very nicely. Some of those diggers are really swinging nicely now.
And so that's there's certainly improvements there. So it's not all about Queensland. Queensland is obviously about the reshaping of it. And there's absolutely cost out initiatives there, but there's certainly productivity drives, which is improving. You can see both mines have actually done well volumetrically relative to what they've done in the past.
And so we'll give a bit more color with that with the commentary on costs in the half year. We certainly can do that. But yes, it's very pleasing to see. It's not just the absolute cost out. The productivity is probably the more enduring benefit that you're getting out of this.
And that sort of underpins our aspirations in terms of where we'd like to take these mines. And but it's certainly early days, but we feel confident being able to rebase the cost base of the business in line with the $100,000,000 that we've mentioned at the outset of the year.
Conference Operator: Thank you. Your next question comes from Robert Steyn from Macquarie. Please go ahead.
Paul Flynn, CEO, Whitehaven Coal: Paul, just asking again about realization and product mix. You aggregate the HCC HCC and SHCC line in the Queensland at 63%. So we've seen a SKUs higher in terms of that proportion of sales, yet realizations are down. Can you perhaps provide an indicative guide on how much SHCC was produced in that mix versus HCC or what the realizations of that SHCC were? Because we're seeing it's not apparent from looking at the index moves in pricing over the, I guess, the 3 quarters under your ownership.
Yes. Yes, I understand that. Yes, look, from our perspective, we prefer to pick realized up at a group level. We're giving you the spits there in terms of price historically. And as I say, the 75 is low.
I think we all accept that's a little lower than what we would want to, but it's just a mix related question. And as I say, the spread does vary, which you can observe as well as anybody else between semi soft, say, for instance, versus the prime low vol and then the low vol versus the prime low vol as well, you can also observe. So we, in terms of renegotiating the contracts we have that are rolling off, we're trying to put in as many as we can to the PLV and a realization of that because our objective here is supply you with a realization to the PLV that you can use consistently over time rather than the quarterly variations that there's a lot of different factors playing into. So yes, like I say, the 75% is on the lower end of where we think it should be. We think it would be on the high 70s, early 80s where this thing naturally goes.
And year to date, the 79% is consistent with that view. Is it fair to say that the drawdown of stocks to keep sales high versus the interruptions you had at Blackwater in the quarter were a key reason for that variance? No, no, no. I think just the opportunity with sales, the sales, the interest in the product has been pretty good. So I think it's actually driven more than that than any interruption for weather related at Blackboard or NOL.
So it's more sales driven. The market appetite for the product has been pretty good.
Conference Operator: Your next question comes from Glenn Wilcock from Barrene
Kevin Ball, CFO, Whitehaven Coal: Joe. I'm going to have a crack at the realization as well, but I just want to focus on HCC and the semi hard coking coal. 83% realization for the half, that implies around 76% realization for the December quarter. In your guidance when you bought the assets, you talked about getting 85% for Blackwater semi hard and 90% for Dounia hard coking coal. So that suggests you should stay in the 85 percent to 90% range.
But to get 76% in the September quarter, is that again just quarterly movement? Or can you hold that 85% to 90% for those 2 hard coking coal, semi hard coking coal products, do you think?
Paul Flynn, CEO, Whitehaven Coal: Yes, it's a good question, Glyn. The numbers that we gave at the time of the acquisition was really based on history. And so that's and the realizations were a reflection of that. And as you note, the spread say for instance, the spread between the PLV and the low vol used to be about 10% or historically it has been in that variation, so not and at the moment, it's wider. And so we have inherited some contracts, which are low vol hard coke based rather than PLV hard coke basis, the contractual basis of the price setting.
So there is a wider spread there that influences that from the start. But that doesn't the key question, I suppose, for everyone is, will we revert back to a normal relationship between PLD and the low vol hard coke indices? And this at this point in time, we'd say 20% is a big spread, and it should be probably be half that. But that doesn't invalidate the historical realizations that we published at the time. It's just that at this moment in time in the market, there's definitely a wider spread than what we would prefer, no doubt about it.
Kevin Ball, CFO, Whitehaven Coal: Okay. Yes, I mean, I guess, you're only looking at a 3 year history when you gave the guidance. And so is the 10 year history better? Or do you think what's driving it now and what can drive that 20% discount for low vol to PLV back to 10%? What do you think is driving it?
Paul Flynn, CEO, Whitehaven Coal: Yes. I mean, you've certainly got certainly got some influence of lower quality products in the market as a result of Russian product sulfate. You certainly got a drag down effect of that. So there's no people are obviously taking the opportunity to take up that product, low quality as it is, and there is more of that in there. Obviously, the Russians can't really affect the hard coke price.
But the semi hard, they can, by virtue of their lower quality products, been circulating at discounts in order to keep cash flow going for them. So that would be the primary reason why I would say in more recent times that spread has widened out.
Kevin Ball, CFO, Whitehaven Coal: Okay. That's great. And then just a quick question for Kevin, if I may. It's going to be great when the money comes in the door. Do you have a sense at all what the tax payment will be on that and when you may have to make it?
Paul Flynn, CEO, Whitehaven Coal: I think you said last quarter, I think tax on that is, I get I've got about $80,000,000 to pay U. S. So there's about $1,000,000,000 net received out of that. It's easy to do the maths.
Kevin Ball, CFO, Whitehaven Coal: And when will you pay it, Kevin?
Paul Flynn, CEO, Whitehaven Coal: After I get $1,080,000,000 which is like it's going to be in this year. It's going to be in this financial year. So it's going to be trued up for the ADF in financial year 'twenty five. So it's going to be 4th quarter.
Conference Operator: Thank you. That does conclude our time for questions. I'll now hand back to Mr. Flynn for closing remarks.
Paul Flynn, CEO, Whitehaven Coal: Well, thanks to everybody for dialing into the same quarter. Appreciate your interest. Certainly, a good quarter. Keen to, now that we've turned into the second half, make sure we deliver in our guidance and anticipated with our expectations. So if you've got any further questions, you know where to find us.
So thanks again, and have a good day.
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