Peabody considers North Goonyella future after fire impact

Peabody Energy’s financial performance in the March quarter has been dented by a fire that broke out at the North Goonyella coal mine in Queensland.

North Goonyella suffered from a tenacious fire in September last year that started from high gas levels during a planned longwall move from the 9 North panel to the 10 North panel.

The company, as a result, realised additional losses during the first quarter that amounted to a damage bill of $US24.7 million ($35.4 million).

Peabody might, however, also recover up to $US125 million of insurance proceeds after reaching an agreement on the settlement of the incident.

North Goonyella remains closed while Peabody facilitates its reventilation and re-entry.

The company’s review of the incident showed areas of the mine demonstrated both elevated methane and carbon monoxide levels after completing coal production in the 9 North panel.

“A change in gas management focus to reduce elevated methane levels in the 9 North panel, including changes to the mine’s ventilation system to increase airflow, inadvertently intensified the oxidation of coal that was likely causing elevated carbon monoxide levels,” Peabody stated.

“Despite sustained efforts to manage the oxidation from the mine surface, the oxidation accelerated into a spontaneous combustion event that eventually resulted in the fire.”

The mine may still produce two million tonnes of coal next year if a restart plan is executed successfully, Peabody stated in a quarterly report.

Peabody would reevaluate its plans, including longwall production targets, quarterly project costs and capital expenditures, if delays occur.