Whitehaven Coal reported a steady start to FY26 despite a 15% drop in quarterly production, with cost-saving initiatives on track and a strong balance sheet supporting ongoing projects.
- Q1 FY26 managed ROM production down 15% to 9.0Mt
- Equity coal sales slightly down 1% at 5.9Mt
- Cost reduction program targeting $60-$80 million annual savings
- Queensland production impacted by sequencing; NSW affected by flooding
- Strong financial position with net debt around A$0.8 billion
Production Overview
Whitehaven Coal kicked off FY26 with a solid operational performance, although production volumes declined compared to the previous quarter. Managed run-of-mine (ROM) coal production fell 15% to 9.0 million tonnes, reflecting both natural operational sequencing and weather disruptions. Queensland operations saw a 17% drop, primarily due to dragline sequencing and a strong prior quarter, while New South Wales production was down 12%, impacted by flooding that temporarily halted open-cut mining.
Sales and Pricing Dynamics
Despite the production dip, equity coal sales remained resilient, decreasing only 1% to 5.9 million tonnes. Queensland sales were down 7%, while New South Wales sales increased by 6%, helped by reduced vessel queues at the Newcastle port. Pricing softened in Queensland, with metallurgical coal averaging A$200 per tonne, down from A$208, while New South Wales thermal coal prices improved slightly to A$175 per tonne. The subdued pricing environment reflects ongoing global market uncertainties, including US tariffs and competitive pressures from Chinese steel exports.
Cost Management and Financial Health
Whitehaven is advancing a comprehensive cost-out program aiming to deliver $60 million to $80 million in annualised savings by June 2026. Unit costs for the quarter were in the upper half of the guided range of A$130 to A$145 per tonne but are expected to improve as production volumes increase in the second half of the fiscal year. The company maintains a strong balance sheet, with net debt around A$0.8 billion, despite a seasonal increase in cash outflows related to dividends and capital expenditure.
Development Projects and Regulatory Progress
Whitehaven continues to advance key development projects, including the Narrabri Stage 3 extension, which formally commenced operations in August 2025, extending the mine’s life to 2044. The Winchester South metallurgical coal project is progressing through environmental approvals, with Queensland Land Court hearings ongoing following objections. Capital expenditure remains prudently managed amid the current low-price environment, with A$10.1 million spent on development and A$4.3 million on exploration during the quarter.
Outlook and Market Context
Looking ahead, Whitehaven maintains its FY26 guidance unchanged, expecting managed ROM production between 37 and 41 million tonnes and managed coal sales of 29.5 to 33 million tonnes. The company is navigating a challenging market with soft coal prices but strong demand fundamentals, particularly for metallurgical coal. Long-term supply constraints and growing demand from India underpin a cautiously optimistic outlook for coal prices. Whitehaven’s disciplined capital allocation and cost focus position it well to weather near-term volatility.
Bottom Line?
Whitehaven’s disciplined approach to cost and capital, combined with steady production recovery, will be key as coal markets remain uncertain.
Questions in the middle?
- How will Whitehaven’s cost savings impact margins if coal prices remain soft?
- What is the timeline and potential impact of regulatory decisions on Winchester South?
- Will production disruptions in NSW due to flooding have lasting effects into H2 FY26?