Good morning, ladies and gentlemen, and welcome to Whitehaven Coal's 2021 Annual General Meeting. My name is Mark Vaile, and I am the Chairman of the Whitehaven Board of Directors, and I will chair today's meeting. Due to COVID-19 restrictions, today's meeting is being held virtually. Every effort has been made to ensure today's meeting runs smoothly. However, if any technological issues arise and it becomes necessary to provide procedural information to shareholders, updates will be provided on our website. You can also contact the Help Centre using the contact details set out in the Notice of Meeting. A recording of this meeting will be posted on our website following the meeting. I'd like to commence the formalities of today's meeting by acknowledging and welcoming Gadigal Elder and Board Member of the Metropolitan Local Aboriginal Land Council, Uncle Allen Madden, who will perform a Welcome to Country.
Good morning. My name's Allen Madden, Gadigal Elder. For my first song, nah, I'm only kidding you fellas, "How are yas?" It's always an honor and pleasure for me to welcome to Country. Give you a bit of an insight of where you are and who we are. But we've all welcomed the country. First and foremost, I'd like to acknowledge our Aboriginal Elders, all Elders, past and present, and pay my respects. To all our Aboriginal Elders, our First Nations, Kamilaroi Mob. Just to give you a bit of an insight about a Welcome to Country, it's something that's happened with Aboriginal people for a long time. I'd like to pay my respects to all our First Nations and let everyone know where we are and who we are. As I mentioned, my name's Allen Madden, Gadigal Elder.
To all our Aboriginal and Torres Strait Islander brothers and sisters, from whatever Aboriginal or Island Nation you may have come from, welcome to Gadigal. And to all our non-Indigenous brothers and sisters, a very warm and sincere welcome to you. No matter where you've come from, whether it be across the seas, across the state, or across town, once again, a very warm and sincere welcome to you to Gadigal. And as I've mentioned many times before, was, is, and always will be Aboriginal land. Only three things short in that: coming, taxation, and going. It's an honour and pleasure for me to welcome Uncle to Gadigal. Gadigal is one of 29 clans of the Eora Nation. The Eora Nation is bounded by Nature's Own, the Hawkesbury River to the north, the Nepean to the west, and Georges River to the south.
In between those three mighty rivers is the Eora Nation. In that nation, there are 29 clans. The clan's land we're on today is Gadigal. On behalf of members of the Metropolitan Local Aboriginal Land Council and of the Gadigal Mob, once again, a very warm and sincere welcome to you to Gadigal. As you travel across these traditional lands and waters, may the spirits of our ancestors guide, look over you, and keep you safe. Once again, on behalf of Land Council and of the Gadigal Mob, welcome, welcome, welcome. Thank you.
Thank you, Uncle Allen, for such a warm welcome. Ladies and gentlemen, there is a quorum present, and I formally declare the meeting open. The Notice of Meeting has been distributed and will be taken as read. Joining me today are my fellow directors. John Conde, AO, Deputy Chairman of the Board and Chairman of the Remuneration Committee. Paul Flynn, our Managing Director and CEO. Dr. Julie Beeby, Chairman of the Health, Safety, Environment, and Community Committee. Fiona Robertson, Chairman of the Audit and Risk Management Committee. Lindsay Ward. And Ray Zage. Also joining me are Tim Burt, our Company Secretary. Kevin Ball, our CFO. And Ian Humphris, our Executive General Manager, Operations. Scott Jarrett and Simon Hannigan, Partners of Ernst & Young, Whitehaven's auditor, are also present.
As this is a shareholders' meeting, only shareholders, their attorneys, proxies, and authorized company representatives are entitled to ask questions, make comments, and vote. Questions can be submitted on any item of business and will be answered later in the meeting. I would like to remind everyone to be respectful of all shareholders who have taken the time to participate in today's meeting. We welcome questions from all shareholders, but it is important to give everyone an opportunity to participate. To that end, please keep your questions short and to the point. In the interest of time, questions may be moderated or amalgamated if there are multiple questions on the same topic. Please include the item of business that your question relates to. Please do not submit more than one question at a time and limit yourself to two questions or comments.
Any members of the media seeking to ask questions should call the media contact number listed on the Whitehaven website directly. Voting will be conducted by a poll on all items of business. If you are eligible to vote at this meeting, a polling icon will be available on your screen. Selecting this icon will bring up a list of resolutions to vote on. You will have the ability to lodge your vote up until the time I declare voting is closed. In relation to resolutions three and four, today both Fiona Robertson and Lindsay Ward are standing for re-election as directors. Fiona and Lindsay are both outstanding and highly capable members of our Whitehaven Board, and I encourage all shareholders to vote in favor of these resolutions. I'll hand over to Fiona to say a few words.
Good morning, ladies and gentlemen. I have certainly enjoyed serving as a member of the Whitehaven Board for the past three and a half years, including as Chair of the Audit and Risk Committee and as a member of the Health, Safety, Environment, and Community Committee. While I am a geologist by training, my background's in corporate finance, where for most of my career I have specialized in the resources sector. I have worked with small and mid-cap companies, initially as a banker, then as a CFO, and over the past 14 years as a non-executive director. I've been fortunate to gain a broad range of practical experience beyond my core skills in finance, risk management, and corporate governance.
In addition to further developing my appreciation for the operational aspects of the mining process, my more recent roles have offered extensive exposure to the complex stakeholder engagement considerations that are key features of the modern mining landscape. In my committee roles, I have been actively involved in Whitehaven's sustainability and climate reporting, a dynamic and evolving area which is the subject of growing interest from a wide range of our stakeholders. It was pleasing to see Whitehaven become, in 2019, the first pure-play coal company to respond to the recommendations of the Financial Stability Board's Task Force on Climate-related Financial Disclosures, more commonly referred to as TCFD reporting.
We continue to review how best to meet the needs of our shareholders through our further work and disclosures in this area, and indeed more broadly in reinforcing Whitehaven's contribution and commitment to stakeholders right through the value chain, from shareholders to customers, employees, and the communities in which we operate. Should I be re-elected, I look forward to continuing to work with my fellow directors and with management to make a positive contribution to Whitehaven's future. Thank you for your consideration.
Thank you, Fiona. I will now hand you over to Lindsay to say a few words about himself.
Thank you, Mark, and good morning, shareholders and guests. I'm pleased to stand for re-election to the Board of Whitehaven Coal today and welcome the opportunity to continue to represent you, our shareholders. It has been a privilege to serve Whitehaven as a non-executive director for almost three years, having joined the board in February 2019. My professional career began in mining, and it is a sector that I'm passionate about and committed to. Until recently, I was CEO of Palisade Integrated Management Services, which has nine diverse infrastructure assets under management, including renewables and gas transmission assets. Prior to this, I was the Managing Director of Dart Mining, a Melbourne-based exploration company, and a non-executive director of Metro Mining Limited.
My technical expertise and practical experience in coal mining, as well as my broader experience in the related fields of ports management, rail haulage, mineral processing, logistics, and infrastructure, has enabled me to make a significant contribution to the Whitehaven Board, including as a member of the Health, Safety, Environment, and Community Committees, as well as the Remuneration Committee. Especially in light of Whitehaven's continued progress on the Vickery and Winchester South developments, I believe my significant and diverse experience across mining and related industries, from operations to capital projects and business strategy, will contribute to the company's long-term sustainability. It is an incredibly exciting time to be part of this sector, and there are plenty of opportunities and challenges we must navigate.
Subject to the approval of shareholders, I look forward to continuing to work closely with my fellow directors and management and continue to grow our business in the interest of all shareholders. Thank you.
Thank you, Lindsay. Resolutions six and seven have been requisitioned by a group of shareholders holding approximately 26,500 shares, representing 0.003% of the company's voting capital. Voting on Resolution seven is contingent on Resolution six being passed as a special resolution. The vote results for Resolutions one to six will be displayed following the Q&A section of the meeting. If Resolution six is passed, Resolution seven will then be open for voting. I now declare voting on Resolutions one to six open. Please submit your votes at any time whilst voting is open. I will give you a warning later in the meeting before I close voting. I am holding open proxies in my capacity as Chairman, and it is my intention to vote all available proxies in favour of all resolutions, with the exception of Resolution six and seven, for which open proxies will be voted against.
The screen now shows details of the proxies received in advance of the meeting on Resolutions one to six. Based upon proxies received, it is clear the company is heading towards a strike in respect of the FY 2021 remuneration report. This is very disappointing, as it will be the first strike for the company off the back of a track record of very highly supported remuneration reports, with no less than 95% support for the company's remuneration reports in each of the last eight years. Operating in a cyclical industry as we do, the Board works hard to achieve an appropriate balance between remunerating and rewarding its people and the alignment of those arrangements with shareholder returns. The Board takes feedback from shareholders on remuneration matters very seriously, and we will have regard to it in the coming year as we review our remuneration structure.
I will now turn to my Chairman's address, which was released to the ASX this morning. Ladies and gentlemen, this year presented a unique set of challenges for our business as Australia and other nations sought to navigate the way out of the COVID-19 pandemic. The world grappled with uncertainty about the pace and nature of the post-COVID recovery. At times, markets were volatile, and this was especially true for coal markets, which saw cyclical lows replaced by near-record highs in the space of just 12 months. In the second half, global industrial activity started to pick up with a corresponding increase in demand for our product. At the same time, in Australia, we were required to implement tough new measures to control the spread of the COVID-19 virus. Measures that are now only, after many months, starting to be wound back.
Since the start of the pandemic, our operations have not recorded a single case of COVID-19. Among other things, this is a reflection of the strict health and safety protocols we have been observing at site for nearly two years now. Our vigilance has supported continuity of operations and helped us meet growing demand from our customers in Asia. As a champion for regional Australia, I'm incredibly proud of the major compensating role we have been able to play for our host communities, with AUD 345 million spent with local suppliers last year and AUD 210 million paid in wages to our predominantly local workforce. I want to commend Managing Director and CEO Paul Flynn and the newly configured management team for their efforts in leading our people and our business through these uniquely challenging circumstances.
Against this backdrop, it has been great to see a range of efficiency and organizational improvement initiatives begin to bear fruit. This is especially true in relation to our largest asset, Maules Creek, which achieved record ROM production in financial year 2021 and demonstrated consistent and predictable performance that continues. We have also seen increased rigour in regard to safety and environmental compliance, supported by an increasingly proactive working relationship with various regulators. This year, the Board has approved an additional environmental metric to the Executive Short-Term Incentive Scheme to ensure remuneration outcomes are linked even more explicitly to performance in this crucial area. Responding to the challenge of climate change continues to preoccupy governments and policymakers globally, particularly on the eve of the COP26 summit in Glasgow. Understandably, there is increasing interest from our shareholders and our stakeholders about what role Whitehaven can play in a lower carbon future.
Since the release of the company's first sustainability report for FY19, management has increased its investment in analysis and communication in this space. The challenge of addressing climate change is incredibly complex, and changes to global energy trends will occur over decades, not years. In a more carbon-conscious world that will need more energy to support growth, we see a role for high-quality coal being used in tandem with advanced generation technology to deliver improved emissions outcomes. The current global energy crunch, while reflecting a wide range of factors, also demonstrates the risks of underinvestment in sectors that will remain vital to economic growth and social development as the world undertakes the multi-decade energy transition. I encourage you to read more on our perspectives in detail in the Sustainability Report 2021 and welcome your continued engagement with me, my fellow directors, as well as the executive team on these matters.
Our perspectives on the continuing demand for high-quality coal in the region underpin the investment thesis behind our growth projects. Vickery and Winchester South will see Whitehaven's portfolio weighted more strongly to the demand for metallurgical coal in South and Southeast Asia. Over the past year, we received final approval for our Vickery Extension project, and both Vickery and Winchester South continue to progress in line with the Board's cautious approach to capital allocation. No dividends were declared in FY21, but historic highs in coal prices foreshadow a return to dividend-paying status in the near future. With the business generating cash at a rapid rate, indeed, over the past months, strong coal prices have allowed the company to make good progress in paying down debt, putting us in good stead to consider our development pipeline over the coming year or so.
Ladies and gentlemen, today we are recommending shareholders vote against resolutions promoted by Market Forces. The view of the Board is that these resolutions are not in the interests of a majority of shareholders, and I reiterate that while we recognize and support the long-term goal of the Paris Agreement, there is currently no multilateral agreement in relation to achieving global net-zero emissions by 2050. Nevertheless, we acknowledge the changing landscape in relation to net-zero emissions, particularly in a domestic context, and we have made good progress in looking at how we can reduce our Scope One and Scope Two operational emissions. I'm pleased to share that we now have carbon-neutral electricity supplied to our sites, are well advanced on investigating behind-the-meter solar opportunities at our Narrabri mine, and continue to research opportunities to generate and/or purchase carbon offsets.
I look forward to continuing the conversation with stakeholders about these important initiatives. In the meantime, we believe Whitehaven and its customers have a positive role to play in the global energy transition. By combining high-quality coal with advanced generation technology, we offer a less carbon-intensive alternative to lower-quality coals that would otherwise meet the underlying demand in Asian markets expected to continue for decades. As a large-scale producer of high-energy, low-impurity thermal coal, we are well aligned to the stricter climate and pollution policies that have either been enacted or are in discussion among our key Asian customer nations, which are seeking to reduce their emissions while maintaining the stability and reliability of their electricity grids. Finally, we agree that continued disclosure around climate-related risks is important.
This is why we have taken great care to evaluate the resilience of our operating asset portfolio in more aggressive decarbonizing scenarios that are consistent with the objectives of the Paris Agreement as part of our response to the recommendations of the TCFD. Ladies and gentlemen, I would like to thank my fellow directors, senior management, and the entire workforce for their significant efforts. And on behalf of the Board, I would like to thank our joint venture partners, banking syndicate, and you, our many shareholders, for your ongoing support as we look ahead to a future for the company that is full of promise and potential. Thank you, and I will now hand you over to Paul Flynn for his presentation.
Thank you, Chairman, and welcome everybody to Whitehaven Coal's 2021 Virtual Annual General Meeting. Today, I'll recap on Whitehaven's financial results and how we, as an organization, have performed during the year. Secondly, I'll give you an update of our customer markets in Asia, followed by how Whitehaven is positioned for the future. But firstly, before we get underway, please note the disclosure statement here with respect to forward-looking statements. Before I run through our FY21 performance, I think it'd be useful to recap on Whitehaven's strategy and purpose, as this gives context to all that we do now and to our future. Whitehaven's strategy is clear. We are owners and operators of valuable assets producing premium thermal coal and semi-soft coking coal.
We are focused on increasing market share in our region, that is, Asia, which, as many of you will know, will continue to be the center of global economic growth and, relatedly, coal consumption demand. Our purpose is to support and sustain regional communities through the successful operation of our assets. Sustainable development underpins everything we do at Whitehaven. As a proudly Australian company, we believe we have a key role to play in helping regional communities grow and prosper. Our STRIVE principles, outlined here on this slide, guide us in how we go about our work. One of the ways we make our contribution is through providing sustainable, long-term, rewarding career opportunities for those who live or want to live in the areas surrounding our operations.
Through employment, we also contribute to supporting diversity in our workforce through direct engagement with the Indigenous community and encouraging increased female participation at our operations. As the largest private-sector economic contributor in the local community, we support not only individuals through employment but also through local procurement, community partnerships, and by paying our federal, state, and local taxes. Now, looking at our performance for the FY21 year, as you know, is very much a year with highs and lows, both operationally and in terms of factors outside our control. Firstly, to safety. As one of Whitehaven's STRIVE principles, safety means our people, workplaces, and communities come first. During FY21, our Gunnedah Coal Handling Plant and Rocglen site, now in its rehabilitation phase, achieved recordable injury-free records of 3,000 days.
Our total recordable injury frequency rate, TRIFR, at 30 June 2021 was 5.86, while this is an increase compared to FY20. We continue to observe a decrease in this metric across the longer term, not just in the number of instances but also in their severity. During the year, COVID-19 continued to present challenges for coal markets and at home. In order to ensure the continuity of operations through this period, it was essential to implement a response plan that considered our people, communities, suppliers, logistics chain, and our customers. Fortunately, the implementation of our response plan has resulted in our operations running without disruption and our workforce having been safe and well, and importantly, COVID-free. For this reason, I want to acknowledge the way in which our people have navigated these challenges with great resilience and flexibility.
For Whitehaven, sustainability is about how our financial, physical, and human capital combines to deliver positive outcomes to our diverse stakeholders at home and abroad. We deliver value to customers, our workforce, shareholders, local communities, and suppliers by developing safely and responsibly operating high-quality, cost-efficient, long-life coal assets. We have highlighted here some of the metrics that we have outlined in our 2021 Sustainability Report, which demonstrates our approach to sustainability in action, and I commend this report to you. Whitehaven acknowledges that our operations and the consumption of coal generates greenhouse gas emissions. In order to manage climate-related risks, we continue to assess our business against decarbonization pathways and disclose financial risks against the Task Force on Climate-Related Financial Disclosures, the TCFD framework. Our business is robust under both the STEPS and SDS scenarios. Now, moving on to recap our financial performance.
FY21, we recorded an underlying EBITDA of AUD 204 million, a decrease of 33% on the prior year, reflecting a period of cyclical lows and the impact of the strengthening Australian dollar. Geological challenges at Narrabri affecting production and coal quality also played a part in producing more than 2 million tons less than planned. We recognized significant pre-tax expenses totaling AUD 650 million relating to asset impairments that primarily reflect optimization plans at our Narrabri and Werris Creek mines. As a result, in FY21, we reported a net loss after tax of AUD 543 million. While also contending with port and logistics disruption, COVID, and other challenges, we managed to contain costs. With the challenges of FY21, it was even more important to observe a disciplined approach to capital allocation. Maintaining a strong balance sheet and liquidity through this turbulence was essential.
At the end of the reporting period, net debt stood at AUD 808 million, but since the end of the year, it has decreased quite rapidly. As mentioned, we recorded a significant item in FY21, and I'd like to take a moment to explain the context for these asset impairments. In order for us to optimize the margin outcomes of production from our Narrabri underground mine, we reviewed the life of mine in detail, and a number of important changes in the interests of long-term value were made. As a result, we have written down existing mine development infrastructure, such as the mains development given the change in mining direction of panel retreat, the development drives associated with the step-around in Longwall Panel 110, and the deferral of Longwall Panel 111 to later in the mine's life.
Each decision is part of the plan to return to a more productive and lower-cost shallow side of the mining lease as soon as possible. Additionally, panels 201 and 202 have been impaired and are expected to be extracted now using the cut-and-flip methodology rather than extraction by the longwall. The carrying value of Werris Creek has also been impaired, reflecting the revisions to its closure plans with production ending in FY24. And while previously we had secured rights for Tarrawonga and Vickery to ship additional coal on the Maules Creek-Boggabri Coal Rail Spur, it is not expected that coal from either of these mines will use this route, so we have written down that intangible asset. I'll now turn to financing. Whitehaven actively manages the complexities of maintaining liquidity and a diversified capital structure.
Near-term maturities are avoided, and we are well-financed for the future, but we will continue to pursue other sources of capital for our growing business. Currently, we are taking advantage of improved margins to retire debt quickly. At the end of the year, you may recall we disclosed a more conservative posture for balance sheet management, which will see us maintain a much lower level of net debt through the cycle. Now to our operations. While we navigated the difficult geological conditions at Narrabri during the year, we also managed to drive our largest mine, Maules Creek, to achieve record annual production of 12.7 million tonnes. This is a clear indication of the operational discipline and consistency we have been striving to achieve across the business. In total, our ROM production of 20.6 million tonnes was in line with the prior year.
For the coming year, FY22, we anticipate a similar level of production with the potential for some upside. In aggregate, our open-cut mines, Maules Creek, Tarrawonga, and Werris Creek, performed well in FY21. For FY22, we are guiding ROM production of 12.1-12.5 million tonnes for Maules Creek. It should be noted that the Maules Creek mining license allows 13 million tonnes ROM production per calendar year. For FY21, our Gunnedah open-cuts, Werris Creek, and Tarrawonga achieved a combined ROM production total of 3.8 million tonnes, which is in line with the prior year. For this new year, FY22, we are guiding ROM production of 3.6-4 million tonnes. Werris Creek is now progressing towards the end of its mine life with three years of production remaining. It will then move into the rehabilitation phase, which will take a further two years to complete with a small crew.
On to Narrabri. As previously reported to the market, during the latter part of the first half, Narrabri's production was impacted when the longwall encountered an unforeseen mid-face three-meter upthrow fault that resulted in reduced productivity, increased out-of-seam dilution, and significant mechanical wear and tear. Navigating these geological challenges and the associated equipment downtime saw Narrabri report historically low production levels at 4.1 million tonnes. Looking forward to FY22, and given last year's results, we are guiding ROM production of 4.3-5 million tonnes. On the slide, you will see the historical production levels in Narrabri. The reason I wanted to point this out is that it shows Narrabri's annual production level in relation to the depth of cover. As the mine progresses deeper, production level decreases.
And importantly, as we return to the shallow side of the mine, volumes will return to those consistent with operating in less than 250 meters of cover. This slide gives you an indication of where the production we'll be producing for FY22 comes from. Notably, it's the beige shaded areas. And scrolling forward a year, this same slide now shows where FY23's production comes from. That is, the balance of panel 110B, shown in beige, before returning to the shallow side of the mining lease in the March quarter of FY23. With multiple panels in the shallow ground, the mine will enjoy many years at the production levels depicted in slide 14 and associated lower costs. With the additional cut-and-flip tonnes being mined concurrently, we anticipate that the mine will be able to produce between 7 to 9 million tonnes per annum in these favorable conditions.
Moving on to the markets now, which, as you know, saw very low prices but also high prices during FY21 and has now moved on to a more positive posture since then. Other than some small boutique domestic customers, Whitehaven exports all of its coal into Asia to either electricity generators, steelmakers, or smelters. The majority of our thermal coal is bought by customers in Japan, Korea, and Taiwan. Our coal is consumed in nothing less than a HELE power station, and all our customer jurisdictions and countries are holders of NDCs that underpin the Paris Accord. So we certainly feel very much aligned to the emissions reduction efforts of our customers and those nations. The majority of our metallurgical coal products are sold into India, Korea, and Japan. The obvious omission from this slide is China. Whitehaven's coal products are not exported to mainland China.
Looking back over the last 12 months, coal markets were as dynamic as we have ever seen. And while we saw cyclical lows in pricing in the first three to four months of the year, a rebound was underway in November and December. Coal prices have now reached historic levels as the global economic recovery picks up pace amid continuing tightness in supply. There's a lot going on in this space, both on the demand and supply side, which has resulted in ongoing tight supply-demand fundamentals. We have seen strong demand from our normal customer base due to improved industrial activity. Coal restocking is underway ahead of the Asian winter, and strong LNG prices make current coal prices even more competitive.
During recent months, we've also seen increased purchasing from other producers as they increase the average coal quality of their own product through blending it with our high-CV thermal coal. It has been over a year now since China's import restrictions on Australian coal were imposed, and this disruption has driven a redistribution of trade flows in the global seaborne coal market, and in doing so, driven greater demand for our high-CV coal from Australia. On the supply side, which is mostly structurally constrained already, coal-producing jurisdictions have seen numerous disruptions already. Indonesia has experienced heavy rainfall, equipment availability issues impacting production, and redirection of coal supply to domestic power generators. Russian and South African exports have been impacted by rail and other logistical challenges, while Colombian producers have faced industrial action.
Wildfires have also interrupted supply out of Canada and the U.S., and the Australian supply has experienced weather events and logistics issues such as the outage of the NCIG ship loader for a period of eight months. All these factors have contributed to create a very tight market supporting prolonged record prices. Looking beyond the near term, the fundamentals which drive the demand for coal look strong. With the world coming to terms with COVID, economies have been responding to the plethora of stimulus policy responses governments around the world have embarked on. Increased industrial activity requires the support of increased electricity generation and building materials such as steel and cement. I'm sure it comes as no surprise to you that Asia figures so dominantly in underlying coal demand data.
Looking now at forecasted demand for seaborne thermal coal to support industrial activity in customer markets, the amount of supply coming from existing mines falls well short of projected demand. This supports a robust price environment for the seaborne coal market. Considering the fundamentals driving Asia's demand for high-quality coal, we view Whitehaven as being in a prime position to make the most of emerging opportunities in the region, not just with our current portfolio of operating mines, but also our growth projects, as there is clear and growing demand for our quality coals within the steelmaking, industrial, and electricity generation sectors. For the success of Whitehaven Coal, it is not only important in the near term our coal products are in high demand, but also for the decades to come.
As I mentioned, all of Whitehaven's customers are in countries who are signatories to the Paris Accord or have domestic policies consistent with Paris Accord objectives. Our customers rely on our high-CV, low-impurity coal products to ensure they meet the regulatory standards set by their own governments now and well into the future. Not only do our customers recognize the value of the coal products Whitehaven offers, but also our state and federal governments acknowledge and support the role that high-quality coal has to play in our region's energy security and industrial growth. This acknowledgement was evidenced by the New South Wales government recently in issuing their strategic statement on the future of coal exploration and mining in New South Wales, which recognizes the long-term global demand for coal, particularly our neighboring region of Southeast Asia.
The federal government recognizes the important role that coal will play in Australia's energy future and has included carbon capture and storage as one of its five priority technologies in its first low-emissions technology statement. This year, we continue to review and address climate-related risks and opportunities as outlined in our 2021 sustainability report, which was released in August. As part of this work, Whitehaven reported against the voluntary framework recommended by the Financial Stability Board's Task Force on Climate-related Financial Disclosures, known as TCFD, to test our business resilience under various low-carbon scenarios. This is our third year of reporting against TCFD scenarios. Our analysis is consistent with previous years, concluding that our operations will be resilient and return positive value to shareholders under all carbon scenarios.
Finally, looking forward to the remainder of this new financial year, our focus is on maintaining consistent production performance and optimizing our coal product offerings to maximize margins and make the most of this incredibly strong seaborne coal price environment. This will ensure we can achieve our goal of retiring debt in the near term and returning value to shareholders. On behalf of management, I would like to thank our workforce, suppliers, and joint venture partners for their contribution throughout the year, as well as to our board of directors for its guidance and support. I extend my thanks to all shareholders for their ongoing support and engagement and look forward to a successful FY22. Thank you very much.
Thanks, Paul. We'll now move to the Q&A section of the meeting.
As I explained earlier, questions can be submitted online via the Lumi platform, or you have the option to either type a question or ask an audio question when prompted. Just a reminder that if you are waiting to ask an audio question and are hearing two audio feeds, please pause the broadcast on the Lumi platform or hang up from the audio line in order to stop hearing both feeds. In the interest of time, questions may be moderated or amalgamated if there are multiple questions on the same topic. Thank you to those shareholders who have already submitted questions. We'll now move to the first question, and I think it's from Ann Macalitz.
The coal price today is much higher than anyone forecast. What is your expectation for coal price over the coming 12 months?
Thanks, Ann, for the question.
Obviously, there's been much coverage of the strength of global coal prices at the moment, particularly in the East Asian region. Overnight, we saw gC NEWC spot price at AUD 194. The forward curve, which is our guide to pricing through not just the next 12 months, but probably the next two years, is giving indications of ongoing strong pricing, particularly for our high-quality product. And given that we trade into the major markets, particularly in North Asia and South Asia, and the indications from our markets and from our customers is that the strength of commitment is going to be remaining quite strongly. I would make the point that we don't sell any coal at this stage into China, and so we are remaining in those high-quality markets in Japan, Korea, Taiwan, and India.
Okay. Next question is from Sando Investments Pty Ltd.
With all the discussion about the move toward zero emissions, what role do you see Whitehaven playing in the transition to this position?
Thanks for the question from Sando. Look, it's important to note at the outset that all the debate and discussion at the moment is about net zero emissions, not necessarily zero emissions, and there is a significant difference. We take the view that obviously there's a transition that's going to be taking place over decades in the global energy market, and emissions reductions cannot come at the cost of economic development and economic well-being, and the evolution in terms of those countries, particularly developing countries, that are seeing a mass migration of much of their population out of poverty and into a middle class and starting to get access to fundamentals that we enjoy in Australia, like water and access to electricity.
We see a significant role that our company and the product that we have, the high-quality product that we sell into these markets, is playing in that transition. If you look again, I refer to our main market in Japan, and the policy settings that have been put in place in Japan are based on the deployment of new technology in their power stations that requires the use of high quality. By that, I mean high-energy, low impurities, low-emission coal like that we produce, particularly out of our major assets, to fuel those power stations. And so in that way, we are playing a significant part in the transition towards a cleaner environment and as these countries that commit ultimately to net zero emissions positions.
Okay. Next question is from Kevin and Jan Daly.
For FY21, AGL's total Scope 1 and 2 emissions was 43 million tons CO2.
How does Whitehaven Coal's FY21 emissions compare with this figure?
Thanks, Kevin and Jan. I'm just going to pass this one to our CEO Managing Director, Paul Flynn.
Yeah, thank you, Chair. Thanks for the question, Mr. Daly. Our scope one and two emissions is another public record through our sustainability report, which I mentioned earlier was released in August. The total of those emissions from Whitehaven for the same period is 1.6 million tonnes of CO2. Great.
Thanks, Paul. Next question is, I think it's an audio question coming from Christine Carlisle.
Christine, would you go ahead and ask your question?
Okay. There might be some problem with the audio there. We'll move on to the next question. The next question is from Hamish Maxwell-Stewart.
Under the RBA's net zero by 2050 scenario, Australia's coal exports fall by 80% by mid-century, and the RBA says there is potential for stranding even if there is no investment into new mines. The Paris-aligned below two degrees scenario has similar outcomes. Has the board considered the RBA's assessment, and what is its response?
We continue to have ongoing work done and assessing a variety of reports that are being published with regard to the future as far as net zero is concerned. Our current position, our sustainability report, and our reporting under the TCFD is clearly linked to the multilateral agreement that exists at the moment, and that's the Paris Agreement, and so that is obviously there's an upcoming meeting that will may set new parameters, so we have stress-tested our resilience against the enduring published IEA scenarios, including the Paris-aligned Sustainable Development Scenario.
Okay. Our next question is from Kevin and Jan Daly again.
With respect to the Vickery mine, have you started arranging funding as yet? For your other mines, you've managed to get a major customer to take an equity stake. Is this again your preferred route?
Thanks, Kevin and Jan. As shareholders would be well aware, we've just received the final approval for Vickery, and so it's probably at least 18 months away from making a final investment decision. We obviously look at all options in terms of funding. We're currently enjoying a fairly buoyant period in the seaborne coal market, which is with our delivering underway at the moment, is going to put us in a stronger position as far as resources to fund future development. And yes, we always consider the opportunities that are available with joint venture partners.
Over the years that we've been going through the development process or the development approval process, I should say, with Vickery, we have seen a number of expressions of interest from consuming customers with regard to the possible joint venture opportunities that might arise at Vickery. So we are in a good position where there is great flexibility available to the company in terms of the financing options for the development of Vickery.
Now, our next question is an audio question from Peter Donnelly.
Peter, will you go ahead and answer the question?
Thank you very much. It's pretty clear from the International Energy Agency's World Energy Outlook that the world is moving away from coal, and it seems like this trend is only going to accelerate. This is a big risk for Whitehaven and its workers.
My question is, what level of planning has management done to game-plan the future of the company in a scenario where coal demand almost totally disappears? And what safety nets are Whitehaven putting in place as support for its employees and subcontractors, for example, compensation and training? The world moves to achieve net zero emissions by 2050 or sooner. Thank you.
Thank you very much for the question, Peter, and appreciate the sentiment and concern with regard to employees. That's a concern that we take very, very seriously. I'm just going to hand to our CEO, Paul Flynn, to make a comment on that.
Thanks very much, Peter, for your question, Mr. Donnelly. We examined all these scenarios, and as James mentioned earlier, in our TCFD reporting, we've benchmarked the business against these scenarios, and we have a robust business under all those circumstances.
We do know that they are scenarios, as the previous question raised from the RBA's own work. These are scenarios, not forecasts. So we monitor this very closely, in particular with the engagement with our customers. In relation to our coal, I would make the point that because of the very high-quality nature of our coal and to the extent that, as you say, in these scenarios, there is reducing demand for coal, we certainly think the high-quality coal is the one that is the most enduring under all of those scenarios. And in fact, in key markets, as lower-ranked coals or older power stations fueled by lower-ranked coals have been closed, we've been growing market share in those instances. And so that's very assuring. We're very much mindful of the concerns of our employees.
And of course, we've got multi-generations working for us, and we want to continue to provide a pathway for careers for employees and for our employees' children as they come along. So we're fortunate we have long-life mines, and we stay very close to our customers' needs to ensure that our particularly high-quality coal is going to be needed for decades to come.
Thanks, Paul. Our next question is from Edmond Campion Garroux.
This morning, I observed three loaded and two empty Whitehaven Coal trains between Muswellbrook and Narrabri alone. With great coal prices and given the Australian Rail Track Corporation had, in the last couple of years, experienced a small decline in overall coal traffic, is there any difficulty in obtaining sufficient train paths to the Port of Newcastle?
The harvest from last year is still being railed for export, and this year's wheat, canola, and cotton crops will put more pressure on the single-track sections
Thanks, Edmund. There's an operational matter I'll hand over to Paul to make a comment.
Thank you, Chair. This is an important area, but I can certainly say that we've got plenty of capacity on the line to be able to meet the needs of our sales profile. ARTC does a good job in managing this important piece of infrastructure, and to the extent that there is further capacity required, very much front of mind when I'm thinking about the Vickery project that we stay ahead of this. But it's pleasing to see the rest of the region doing well with harvest being positive. But at this point in time, no problems at all getting our products to market.
But pleased to see that the other industries in our region doing well at the same time.
Thanks, Paul. Now, our next question is an audio question from Helen Lawrence, I think. And I understand Helen might be having some problems with the audio lines. So I'll just ask Helen if she can pause the broadcast. I can confirm that she's done that before we go to her question. Are you there, Helen? Doesn't like it. We might let the managers of the platform just follow that one up. We'll go to the next question, which is from Scott Knight.
There are currently very strong supply and demand fundamentals, which are underwriting historical high prices in both thermal and metallurgical coal seaborne markets.
Can you please provide some insight on whether the company is seeing the same strong end-user demand in the medium to longer term through, for example, long-term offtake contract commitments, which give confidence that this current cycle is sustainable?
Thanks, Scott, for your question. And the premise is absolutely correct. There are very strong supply and demand fundamentals at the moment, and that's sort of favoring a stronger commodity price environment for both thermal and metallurgical seaborne markets. And yes, we do see that continuing. And the anecdotal evidence from the market with our customers underpins that, as does the published forward curves going out through calendar year 2022 and 2023 in terms of the underlying strength of the pricing in the marketplace. Just with regard to comments on our long-term offtake contract commitments, I'll just get Paul to make some comments on that.
Thank you, Chair.
We're certainly seeing a very robust market, as you've asked about and Kevin's stated. Our long-term customers are certainly very keen to ensure supply. In fact, many of them are attempting to draw cargoes forward given their very, very strong underlying demand needs at present. We are well supported by long-term contracts with joint venture partners in particular, so we have long-term arrangements there which certainly give us confidence of being able to move our product, not just in these very good times, but certainly through other parts of the cycle as well. But spot demand is pretty tight. And as you can see from the prices, it's not just very obviously buoyant in the historic price levels at the moment, but the outlook for the next couple of years also sees it in the forward curve as mentioned earlier, above historic levels.
Thanks, Paul. We're just going to go back to the earlier audio question of Helen Lawrence. Are you there, Helen? Okay. We'll come back to Helen in a minute. We'll move on to there's another audio question from James Thom. James?
My question.
Welcome, James.
Good day. My question relates to our three proposed coal mining developments at Vickery, Winchester South, and Narrabri South. I understand that total capital expenditure required for these projects is just shy of AUD 2 billion. I'm interested to understand how management intends to finance these projects. Does management expect the need to secure external project finance, or will we be able to fund them entirely from cash reserves? To what extent will the existence of our bank credit facility and potential bond issue contribute to our ability to pay for these projects? When can shareholders expect final investment decisions on these mines? Great. Thanks, James.
There's a number of questions in your overall questionnaire. I'm going to hand over to Paul to comment on those.
Thanks, Chair. That's a good question, James. There's a lot in that. I might just deal with that in reverse order if I could. Narrabri South, firstly. That's obviously a life extension of our existing mine, and I draw the distinction with that one in particular, given that that is the continuation of that mine and the mine's capacity to fund itself through this investment. It is a little lumpy in the out years. There's about AUD 400 million worth of capital required for that, but it is spread over time, which is good. As the chairman's noted earlier in relation to Vickery, we won't be taking a decision on that, expected in the next 18 months.
And Winchester South, obviously, has only just finished the exhibition period for its EIS and is now within the evaluation phase with the Queensland government, but is on track, which is very positive. Both Vickery and Winchester South do have, obviously, more than half in terms of met coal components of the products. And so the funding of those two projects is certainly looked upon favorably when you have a significant met coal component. We have stated earlier that given the large amounts of capital involved in these projects, both of which are very good, but we have stated previously on numerous occasions that we wouldn't attempt to do these concurrently and that would certainly be one at a time. We don't have the capacity financially or from a human capital perspective to do that.
So it would be measured, and it would be, obviously, on the basis that we are assured that the coal price outlook continues to be robust to underpin these exciting developments. But in the meantime, Narrabri South is moving along. Vickery is to say 18 months before FID would be contemplated, and Winchester South then after.
Thanks very much, Paul. And our next question is from Edmund Campion Garroux.
At a quick look on the marine traffic site this morning, there are about 30 ships waiting offshore from Newcastle. How do you judge the port's productivity, and are there any significant delays to loading Whitehaven Coal onto these bulk ships?
Thanks, Edmund. Backlogs do occur from time to time, but we're not observing any queues currently or delays. In the last 12 months, we've had the impact of one of the coal loaders at NCIG being out of service.
But that backlog now is largely being cleared. I'll just ask Paul if he's got any further comment.
Yeah. Thank you, Chair. The number of ships off the coast is reducing quickly. And as you say, NCIG is back now to full capacity. And in fact, that's a very small component of the 30 ships that you quoted there, Edmund. And in fact, it's very, very small, small single digits. In fact, at NCIG, which is our preferred loading point, although we do use both. There has been a planned mechanical outage at PWCS, short in duration. So we don't see any problems at all moving our coal to market. Thank you.
Thanks, Paul. The next question is from Mark Horner.
Please briefly explain the reasoning and timing behind Resolution 5.
Resolution 5 is a standard renewal that is required to be put to shareholders every three years in accordance with the provisions under the Corporations Act. We're just doing that. It's coming in on that cycle that we need to renew that authority from shareholders. Okay. We move on to the next question from Kevin Daly and Jan Daly.
I've always thought that Japan reopening its nukes was a major risk for Whitehaven Coal. Has there been any policy changes in this area? I suppose thinking of the question in response to that, I suppose the latest policy change in Japan was at the time of the previous government, the Suga government, where Prime Minister Suga made Japan's commitment to net zero emissions by 2050.
We understand that the department responsible, METI, in Japan has just announced or restructured their energy sources mix in terms of going forward to achieve that over the next 30 years. That does include an increase in the contribution. In fact, it relies heavily on an increase in the contribution from nuclear power to the energy mix in Japan. Some commentators in Japan have called that ambitious because of the electoral sentiment, particularly following the events that Fukushima almost a decade ago. So it remains to be seen how the Japanese government goes in terms of getting the contribution increase and the level of the contribution of nuclear energy back into their electricity mix. In the meantime, there's still a very strong focus on fossil fuels in their mix.
And in fact, as I mentioned earlier in our comments, the deployment of technology across a lot of the fossil-fuel-fired electricity generation plants in Japan underpins a lot of the position, much of the position that has been taken with regard to net zero emissions by 2050. And so I suppose I'll get because Paul's a bit closer to this with our customers than me, but I'll get Paul to comment. But it's obviously we watch with interest the contribution that nuclear makes. If it doesn't and can't make the contribution that is expected by the Japanese government, then that will leave a greater responsibility, if you like, on the contribution to their system by fossil fuels. What about that at all, Paul?
Chair, I don't have much to say other than to say we're obviously in close contact with our Japanese customers, many of whom also have exposure, obviously, to the nuclear part of the sector, and just to see what progress is like. Obviously, given the large number of individual units of that GW of capacity installed in Japan, a very small percentage of them are actually back online. As you say, it's a complex situation navigating the social dimensions of bringing those nukes back online. The aspiration, obviously, is to bring a larger proportion of them back as soon as they can. In the meantime, obviously, gas and coal continue to play an underpinning role and will continue to do so whilst they navigate the sensitive pathway to bringing further plants back online. It is complex because the average age of the plant there is relatively mature.
Those who have a relatively modest remaining life of those existing units, we understand, are least likely to be brought back into service. With the new safety requirements having to be retrofitted to the ones that are capable of coming on, it does take some time.
Thanks, Paul. Now, our next question is from Tsudita Investments Pty Ltd.
Can I suggest the poor remuneration report outcome is due to the board's messaging of potentially wasting money on green and brownfields expansion, which will not be valued high by the market, instead of using the funds for more accretive shareholder returns, such as share buybacks, considering that the share price is trading at a record low EV/EBITDA ratio?
Thanks very much for the question. Well, I'll tell you, it's more of a comment than a question.
I think that during the course of the meeting, we've addressed the remuneration issue. But the fundamental premise of the comment, I don't necessarily agree with. I think the market focuses on remuneration as a reward and retention process for a quality management team rather than strategic company objectives. So we'll go to the next question from Keith Marlow.
Firstly, well done in guiding the business through a most difficult and trying time for us all. I would like to know, given the probable and most welcome return to dividend payments status in the near future and the large number of retail investors owning stocks in Whitehaven, have you considered implementing a dividend reinvestment plan? Is this something you can do?
Thanks very much, Keith, and return to dividend paying status would be very welcome.
Obviously, as we've indicated, the priority continues to be delivering as far as the company's debt is concerned, and that is happening at a very good pace, if I can say, at the moment. That does then put us into a good position to be considering dividends. The company's dividend policy remains in situ. The dividend policy is to distribute between 20% and 50% of NPAT. As we've continued to flag to the market that we want to deliver and retire as much of our debt as possible whilst we're in the strong market conditions, and we will then be considering dividend. Obviously, this will form part of our ongoing assessment of our capital management program going forward, which Paul might make comment on.
It's an important consideration, and we welcome, as you say, the opportunity to return to dividend paying status as quickly as possible, Dr. Marlow. We are delivering quickly, and so that will bring that question into focus sooner rather than later, no doubt about it. We do expect there will be net cash. We had suggested about March to April, but we think it'll actually be a little bit sooner than that, so this question is a very important one, and all options are on the table here as far as the appropriate means by which to return capital to shareholders, so we don't have large capital demands within the next eight months in particular, and so whether it be dividends, buybacks, a dividend reinvestment plan, all these permutations will be considered by the board at the half-year and four-year turning points.
Yeah, thanks, Paul.
We'll go to the next question, which is an audio question from Monica Saines.
My question is for the chairman, Mr. Vaile. In September 2020, the company said they fell significantly short on environmental compliance. Since then, Narrabri Underground Mine was fined AUD 372,500 for a list of exploration breaches, and Maules Creek Mine awaits sentencing in the prosecution of the Natural Resources Access Regulator for surface water theft. Furthermore, after receiving a formal caution for landfilling off-the-road tires just months before the commencement of the National Product Stewardship Scheme for those tires, Maules Creek Mine is applying for the right to bury hundreds of these industrial tires for the remaining life of the mine. How do these prosecutions, formal caution, and tire landfilling reflect on Mr. Flynn? And how does the company give extra weight to these matters in Mr. Flynn's remuneration?
Monica, thank you very much for your question.
The environmental issues that you raise, the board and the company take very, very seriously. A number of those issues are historical, going, for example, the water going back three or four years ago, and the other issues going back a couple of years, and of course, we do, in the remuneration package, and particularly in the STI KPIs, have two measures in terms of environmental management. One is for environmental compliance and a check measure on the level of environmental compliance, and the other is with regard to incidents. Last year in the STI, I think from memory, this is FY 2020, there was about 19 on the incident list. And there was no STI paid on that last year. This year, that had fallen to about five, a significant improvement on the past track record.
And I'm not sort of going to make any excuses, but we'll highlight that during this period and just prior to that period, we'd had significant changes to the management personnel and structure on the ground in terms of the focus on many of these issues. And so investor expectations in terms of environmental performance are paramount in our mind. We've made a significant improvement over time. We do see in the media from time to time reporting on issues that sometimes can be three or four years old as they come forward, as the water issue was at Maules Creek. And so we are through the remuneration process, incentivizing much, much better management of these issues and much better observation in terms of day-to-day compliance mechanisms. Okay. We go to the next question, an audio question from Dr. Claire Smith.
I note that page 10 of the 2020 annual report included an intention to grow our portfolio from a managed level of approximately 21 million tons in 2020 to over 40 million tons by 2030. I couldn't see a similar statement in the 2021 annual report. Is it still the company's intention to significantly expand its coal assets and operations to 2030 and beyond? What volume of production does management expect in the years 2030 and 2040?
Just as an overarching comment, Claire, it is part of the company's strategy to increase the level of production, but increase it on the metallurgical side of the equation, increase the contribution that metallurgical coal is making to the cash flows in the company as opposed to thermal coal. Hence, the largest addition to our investment pipeline was Winchester South, which is a metallurgical coal mine when ultimately it gets approved and developed.
But I'll just throw to Paul to make further comment on your question.
Yeah, thank you, Chair. And just to add to that briefly, it's just the arithmetic there, as you've mentioned, Dr. Smith, our stated current levels are around the 21 million tons. If you add the capacity of Vickery, 10 million tons per annum now approved, and the potential capacity for Winchester South up to 15 million tons once approved, then you certainly could surpass those levels that you've mentioned there earlier. The development timeframe, as everybody understands, varies, as those statements that we've made previously also vary. And given the elongated nature of the approval processes, that can change. But certainly, those numbers are within the grasp of the company with its existing pipeline.
Thanks, Paul. Our next question is from Mark Horner.
About what percentage of coal is sold at spot and contract?
What is the typical length of a contract?
Paul, another comment on that?
Thank you, Chair. Generally, our term business is about 70%-80% of our typical year. So we definitely like to have long-term arrangements with our customers. And the typical length, there probably isn't one. We have long-term offtakes in terms of life of mine with our joint ventures at Narrabri site, for instance, as an example. Others are actually much shorter dated but are evergreen in nature. And so even though the legal tenure might be two to three years or even one year, they're just renewed as they roll over. We tend not to be a large spot seller into the market. And we have sold a little bit more spot market activity in this past 12 months.
But that was principally off the back of Narrabri producing the fault-affected coal over the last six to eight months of the year, which meant that it was outside the range of our typical supply arrangements. So there was a bit more spot activity in that regard. But ordinarily, 70% is a good representation of our term business position.
Thanks, Paul. Now, the next question is an audio question from Joe Taban. Hang on, Joe. There we go. And the next question is from Vellore Capital.
What, if any, hedging activity is being undertaken to take advantage of high coal prices?
Thanks for the question. We generally don't hedge in the paper market. How we fix prices is by dealing with end users, consumers. And we layer that into our business.
At the end of the year, we generally finish with around 20%-30% of total coal sales having been fixed earlier in the year. Okay. Our next question is from Peter Wills.
I am the treasurer and committee member of the Dorothea Mackellar Memorial Society, a not-for-profit organization based in Gunnedah, northwest New South Wales. We have been in existence for almost 40 years. We run a highly regarded national poetry competition for school-age students, Australia's largest, and we are dedicated to preserving her legacy. The property Kurrumbede bought by the Mackellar family in 1905 and to which the poet Dorothea was a frequent visitor is owned by Whitehaven Coal. It forms part of your Vickery Mine project. Three years ago, we applied to nominate the homestead and surrounding outbuildings to the New South Wales State Heritage Register.
That process is currently coming to its conclusion, and we, along with many other Australians, are hopeful it will be successful. Will your company stand in the way of the homestead precinct being declared a property of state heritage significance?
Thanks, Peter, for your question and for your service to the Dorothea Mackellar Memorial Society, which I happen to be patron. I suppose in response to your overall question, there's a few things that we should note. We as a company have consistently maintained the property is of local but not state heritage significance, and that's based on advice from independent heritage experts. The Dorothea Mackellar Memorial Society submitted the nomination, so potential state heritage listing is under consideration by the State Heritage Council.
Whitehaven's company is publicly committed to preserving the property, has committed AUD 500,000 to maintaining the gardens, hosted the first-ever public open day, attracting more than 1,000 visitors, and continues to support the Dorothea Mackellar Memorial Society Poetry Awards. No previous owner of this property has done more to preserve the memory of Kurrumbede's association with Dorothea Mackellar or has worked more collaboratively with the local community groups to give them a say in the property's future. Our commitment to Kurrumbede will endure regardless of whether it's listed on the State Heritage Register or not. Thanks, Peter. You had another question, I think.
Landholders across the northwest of New South Wales are concerned about the proposed Hunter Gas Pipeline that also runs for a significant track of your land owned at the Vickery Coal Mine site.
You didn't disclose the pipeline in your EIS planning for the Vickery Coal Mine. Where are you up to with the negotiations for allowing this pipeline on your land along the Vickery Mine site? The proponent of that pipeline isn't having much luck with other landholders denying access to the gas pipeline proponent, and the route seems to be being redirected via public land. Will this significant project in the northwest affect the proposed Vickery Coal Mine development?
Thanks very much, Peter. I might just give Paul the comment on the technicality of that question.
Yeah, look, in essence, Chairman, thank you. It won't affect us. And the nuances of any proponent's applications that might cross land from ours is not really a question for us to answer. It's more about these questions being directed to those proponents.
In this instance, the Hunter Gas Pipeline Pty Ltd, but no impact on the Vickery mine.
Okay. Thanks, Paul. Next question is from Tihana International.
With the heightened focus on the resources sector and indigenous engagement, can you please let us know what Whitehaven is doing to support and respect our First Nation peoples?
Thanks very much for the question. Just from the board's perspective, we're extremely proud of our record in this area in working with the local indigenous community where we operate. I'll just get Paul to highlight some of the things that we've been doing.
Yeah, thank you, Chair. Yeah, as I say, we're very proud of the indigenous engagement efforts the company has brought to the area over the last seven or eight years and the resulting efforts to bridge the gap in terms of indigenous disadvantage in the area.
As a company, we are now 9% Indigenous, which I'm not aware of anybody approaching numbers like that at all in the state. Maules Creek, obviously, was the catalyst for the great shift in our own participation in that regard and now has 20% Indigenous. So it's a fantastic effort and something which we would see moving forward being aspirations for our future business as well. Our support is intergenerational. We have generations working with us. And it's not just about children and parents, but it's working with us also. But it's also about dealing with the community more generally. Our support extends from preschool levels with health and schooling and employment, obviously. We're supporting kids at senior school as well. And employment and then procurement with Indigenous businesses in the region also has been a very, very significant step forward for us.
In fact, this last year has been over AUD 5 million with 14 individual indigenous businesses in the area. So we think we've got some reasonable runs on the board here in this regard. There's obviously more we can do, but we certainly see this as something we're very proud of and will continue to put our shoulders to the wheel to reduce indigenous disadvantage in our area.
Thanks, Paul. Next question is from Mark Horner.
What is the last 12 months' growth rate in HELE plants in Asia other than China?
Thanks for the question. The exact numbers I don't have to hand. We can come back to you. But continuing, and we're seeing continuing growth as these countries look to support development, reduce CO2, and maintain stability of electricity grids. Asia generally has the youngest installed fleet globally of around 12 years of age.
These are very long-life assets that have been invested in. But the important point to make is that they require the support of companies like ours that can produce and export a high-quality product to be used in those facilities. Okay. The next question is an audio question from Anna Ho.
My question is for Mr. Flynn. New South Wales Exploration License applications ELA 6327 and 6328 called Gorman North were announced by the company in August, then abruptly withdrawn in September after it was found the application lacked ministerial consent. This application has not been re-lodged. My question is, why did the application not have ministerial consent, and why has the company not re-lodged the exploration application?
Thanks for the question, Anna. I'll just get Paul to respond.
Anna, thank you very much for that.
Look, what you mentioned there is really just an administrative matter on the part of the government, I believe. In fact, we lodged the application, then they asked us they told us or made us aware of an administrative anomaly on their side, and they've asked us to withdraw and resubmit shortly. So that's the only nuance there. So administrative matter, nothing more than that, we're told by the government.
Thanks, Paul. Next question is also an audio question from Jan McNicol.
Thank you, Mr. Chair. In the 2021 sustainability report, the company models its resilience under the stated policies or steps and sustainable development SDS scenarios published by the International Energy Agency. However, the company has not assessed its resilience under the net zero by 2050 scenario.
In that scenario, the IEA states no new coal mines or extensions of existing mines are required, and unabated coal demand falls by over 98% by 2050. Can the board explain the impact this scenario would have on our business if it came to pass in terms of demand and cash flow? Given this scenario was the central scenario of the 2021 World Energy Outlook, why has the board not integrated this scenario into its reporting? Will the 2022 sustainability report include a detailed examination of this scenario? Can I assume, given the company has not included this scenario, that its business relies on the failure of net zero by 2050? Thank you.
Thanks for your question, Jan. So that last part, I think that last point, I think the answer is no.
And the overarching comment is that at the time of producing our sustainability report and reporting against TCFD for FY21, there was one multilateral agreement in place, and that's the Paris Agreement. But I'll just ask Paul to go into more detail.
Yep. Thank you very much, Chair McNicol. This is really just a matter of timing from our perspective in terms of your question. The issue here is really just the net zero emissions scenario up until, in fact, the WEO, the World Energy Outlook 2021 report was only very recently, at least. It didn't make it in time for us to obviously run the drill over that for incorporation into our sustainability report for 2021, which was released in August. So there's no suggestion on our part at all not to look at that. We'll certainly have a look at it.
We acknowledge that these are scenarios and not forecasts, and we need to look at all these new scenarios as they emerge, and we stay very close to it. We are intimately engaged with the International Energy Agency through our representation on the Coal Industry Advisory Board of the IEA, and so we look at these things in detail, and so for next year, our sustainability report, we'll be looking at that as another part of our assessment of our TCFD obligations.
Thanks, Paul. Next question is from Robert Ruck.
I appreciate that Whitehaven does not export coal to China, but could you please explain what impact, if any, the recent announcement by the Chinese National Development and Reform Commission that they intend to take measures to stabilize coal prices might be expected to have on coal prices generally and Whitehaven in particular in the near to medium term?
Likewise, what is the potential impact on global coal prices generally and Whitehaven in particular if China takes measures to increase its domestic coal production?
Thanks, Robert, for your question. Well, I think that we've already seen the moves that have been taken by China in terms of increasing its domestic coal production. And at the same time, the impact of the action that they've taken with regard to Australian coal, and it saw them sweeping up available coal in many other markets across the world. And it's in part given rise to the pricing that, as it stands today, I think that you hear a lot of anecdotal stories coming out of China in terms of the actual cost of their domestically produced coal by the time it arrives for consumption at power stations or steelworks.
It's significantly higher than global spot prices and contracted prices are at the moment. We're already seeing the effect or not of some of the decisions that have been taken by the NDRC. Obviously, being such an enormous consumer, we watch on a daily basis with movements that are coming out of decisions coming out of China and how that's affecting the global seaborne market. Paul, do you want to add to that?
I will, Chairman. Thank you. Yeah. I think when this unofficial coal ban came on over a year ago now, the market did quickly realign itself in terms of the trade flows and now sits in what historically you would say is a non-traditional flow from a coal flow perspective. But that generally has been positive for us, if I can say that.
Certainly, demand for our high-quality coal for blending purposes has been. There's an extra layer of demand that sits across what is otherwise very strong underlying demand from each of our customers' jurisdictions. I think long term, everyone would hope that Australia and China's relationships normalize and we could return to more traditional flows. I don't see too much downside associated with that from us. I think that would actually be a net benefit for us overall. I have noticed the recent announcements from the government, the Chinese government, to try and increase production domestically. I do note that obviously they're approaching their winter season, and typically, they haven't been able to produce more coal ahead and during that winter period. It's often quite obviously dangerous from a safety perspective as well attempting to do that.
But I think over time, they can achieve further growth in their own domestic production. But that generally means displacement of lower-ranked coals such as Indonesian coals and lignites.
Thanks, Paul. And next question is an audio question from Ava Prinz.
In June, the Federal Court found that the Minister for the Environment has a duty of care to protect young people from the harms caused by climate change. In his judgment, Justice Bromberg found the evidence demonstrates that a reasonable person in the position of the Minister would foresee that by reason of the Vickery project's effect on increased CO2 in the Earth's atmosphere and the consequential increase in global surface temperatures, each of the children is exposed to a risk of death or other personal injury.
I am one of the young litigants that brought the class action against the Environment Minister, Susan Ley, over the Vickery extension project. The project plans to dig up 168 million tons of coal over 25 years, creating 100 million additional tons of CO2 emissions, or the equivalent of 20% of Australia's total emissions in 2019. How does the board explain its decision to proceed with the Vickery coal mine in light of the risks caused by these additional emissions, including death and personal injury, accepted by the Federal Court? Will the board apologize to the young people of Australia for jeopardizing their future for the sake of profit?
Thanks, Ava. I presume that's more of a statement than a question. Obviously, as you outlined, there's been a court process that the Federal Minister has been and the Federal Government has been involved in. There was an outcome in that.
The Federal Minister has made her decision under the EPBC Act in terms of the approval, and I understand that there is further court action that the Minister and the Government are defending. That's being dealt with by them, not us. We're getting on with our planning in terms of this particular project as it is concerned. Okay. We move on to the next question, Joanne Lee Taylor.
Once debt has been paid down and assuming prices remain fairly high, would you consider raising your dividend policy to be above 50% NPAT?
Thanks, Jo, and that's an understandable question from a shareholder. Obviously, we have all options remain on the table when we're assessing and continuing to fine-tune our capital management program, the demands for capital.
We had an earlier question today with regard to the alignment, if you like, of projects in our pipeline that are going to require funding, where that funding's going to come from. But we take very seriously the interests of shareholders and their patience through the cyclical nature of our business when in some years the dividends aren't paid and the patience that's exercised by shareholders. And we like to, obviously, when we can, when we can afford it, to give priority to paying dividends. We flag to the market that our priority activity at the moment is delivering, is reducing our level of debt. That's happening at a faster rate than we initially anticipated. So it indicates that we'll be moving back to enacting our dividend policy a bit quicker, if I can put it that way.
And so, but in terms of your question and changes to dividend policy, all these matters remain on the table as we scope out our strategy as far as capital management's concerned. We go on to the next question is from Robert Dougall.
Can you comment on the importance of Whitehaven's quality thermal coal in the blending with lower-quality coals from other producing countries at your Asian power generator customers?
Thanks, Robert. And very important question. I'll just pass to Paul to go into some detail on that.
Thank you, Chair. Our coal is highly sought after, as many of our shareholders understand. So it's not just in particular, say, for instance, Wall Street, it's not just the Newcastle benchmark price that we receive. It's a premium well above that for both its extra energy that we deliver and the quality dimensions of it.
Your question about the blending benefits of it was certainly. There's been high demand for that very reason. Not only are we displacing the consumption of low-quality coals, but we're improving the average quality of those other low-quality coals in the market, and this is important to our Asian customer base, as you're mentioning. There's about 17 countries who have incorporated the consumption of high-quality coal in better technology power stations as a component of their NDCs that underpin the Paris Accord, and so in our business, we are certainly enabling the emissions reductions pathways of our customer countries' jurisdictions, and that makes us feel pretty good about what we're doing to contribute to that transition to a lower emissions future.
Thanks, Paul. Next question is from Praveen Bista.
As current shareholders, why should we continue to remain shareholders when the price of coal is all-time high but stock is trading very low and world is moving away from coal?
Thanks, Praveeni. Look, we would encourage shareholders to remain invested in our company. We're in the upper echelons of the quality product part of the market, if you like, as is just outlined by Paul. That would put us in a position of having our product in demand for decades to come as the world goes through the process of transition. And that's not to say that at some point in time, the fossil fuels will remain a part of the energy mix for a significant period of time going forward. Sure, we see fluctuations in stock price. And the market cap at the moment is not as low as it has been.
It's come up a little bit as the GC and UG spot price has come up. But we're still experiencing a lot of strength or seeing a lot of strength in the forward curve as far as pricing is concerned. And we think that ultimately, our share price is directly correlated to those seaborne coal prices. Of course, there's always an impact around about this time when there's a lot of commentary in the media happened during the period of the Paris climate change meeting. And there is an impact on them from the commentary around the Glasgow meeting and what's going to happen at the Glasgow meeting. But we would certainly still encourage people to remain shareholders in this company. It's certainly got a very bright future.
I just, Paul, wanted to add some comments. Thanks, Chair.
I'll just make the simple point for shareholders that there's plenty of upside in our share price and the future of the company. Whilst spot prices are very high, as you say, so that's very important. But the share price obviously is not marked off the spot price on the day. And as we pointed to earlier, there's very, very robust supply-demand fundamentals if we look into the out years. And the forward curve certainly would indicate that they are better than historical levels of average price available to us. And so if you back out to the implied coal price for our share price today, there's still plenty of upside for shareholders.
Thanks, Paul. Next question is an audio question from Karen Large.
Thank you. I have a question for the company regarding the bond issue that was announced to the Financial Review. Mr.
Ball stated to the Australian Financial Review that the bond issue was delayed by the Evergrande crisis in China. I would like to know when the bond issue is likely to occur. I note the coal price is temporarily at near record highs. How does this bear on the timing of our bond issue? Is the bond issue something shareholders can expect to see before Christmas?
Yeah. The issue, the bond issue that you referred to, is not being impacted upon by coal prices. It's impacted the global bond market. I'll just get Paul to make a comment on that.
Yeah. Thank you, Chair. Look, the statements from our CFO are appropriate.
What he's referring to and what we acknowledge is that given the gyrations in the Asian bond market and principally off the back of the property market disruptions that we're seeing there, which you've already referenced, there is some caution on our part in terms of broadening out our base of sources of debt capital. We think it's the right strategic move for the company to diversify. We don't need it now. We were and are comfortably banked with no near-term maturities for our existing debt. In fact, because we're delivering so quickly, we'll be, as I said, net cash very shortly. So we'll do it in a time of our choosing. But we'd rather not dip our toes in the waters that are evidencing some disruption from sectors up and down.
Thanks, Paul. Next question is an audio question from Bronwyn Vost.
Thanks, Mr. Chairman.
In 2017, the Maules Creek Coal Mine was elevated to the highest environmental risk rating possible by the NSW Environment Protection Authority. What is the current environmental risk rating for the following four mines, please? Maules Creek, Narrabri, Tarrawonga, and Werris Creek. And have any of these four mines had their status changed in the last 12 months, please?
Thanks, Bronwyn. And you referred to a rating back in 2017. And as I indicated in an earlier answer, the management of environmental issues at all our sites, and particularly Maules Creek since 2017, has seen firstly some significant management changes and focus on our responsibilities. And we have seen a significant decrease in the number of environmental incidents at all sites. And so in answer to your question, that rating would have significantly improved from where it was back in 2017.
The trend line continues to go down as we continue to bring greater focus through our different internal mechanisms on the responsibilities we have in terms of managing any of these issues. Now, our next question is also an audio question from Christine Cook.
Good morning and thank you, Mr. Chairman. I note that on page 24 of the 2021 sustainability report, the company states, "Whitehaven is a signatory to the Minerals Council of Australia's Climate Action Plan, which was released in June 2020. The plan details the mineral industry's commitment to the goal of net zero emissions. Can the board confirm that the company is currently positioned to support the goal of achieving net zero emissions by 2050?"
Thanks for your question, Christine. I'm going to get Paul, as he's a board member of the MCA, to comment on your question. Yeah.
Thanks very much, Chairman. Yeah. Look, we're certainly part of and supportive of the Climate Action Plan as released by the MCA. And also more recently, we support the ambition of net zero emissions 2050 as also outlined. We do acknowledge that the MCA is a broad church in terms of its members, but we are represented there at the board as the chairman's noted. And we're supportive of that ambition.
Thanks, Paul. Okay. The next question is let me just get my it's an audio question from Helen Lawrence. Okay. Sorry, Helen. Next question is also an audio question from Loretta Allen.
Good morning. My question is about the sustainability report. On page 25, the company acknowledges that there's a medium to long-term transition risk posed to the company by reduced access to funding and insurance. As I'm sure you're all aware, organizations are moving away from coal mines.
So specifically in the report, you state, "We're also exploring alternative sources of funding and insurance." Can you please describe what those are and what implications this might have for the expenditure of Whitehaven and also for shareholders?
Thanks very much for the question, Loretta. Obviously, on an annual basis, we review our financial structuring, our capital management, the debt component of that, and where our finances are coming from as we do insurance. And that policy disposition will continue as far as that is concerned. We had a question a little while ago about the bond issuance.
And it's no secret we intend to replace part of the debt structure in our capital management structure with a bond when the market conditions are conducive to what we want to do. And so we are continuing to take steps in that regard. We're very fortunate at the moment with the market circumstances that prevail that we are less and less reliant on debt capital on a daily basis, if you like. And we're reducing our exposure to banks on a daily basis. But obviously, going forward, where we have a couple of projects in the development pipeline, we're going to need some debt capital to go into those, possibly joint venture partners, as well as any accumulated cash that we can retain to invest in those new projects.
Paul, do you want to add to that?
No.
Thanks. Okay. We're going to the next question.
There's an audio question from Jan McNicol.
Thanks, Mr. Chair. Is it correct to conclude from your previous answer about the net zero emissions by 2050 issue that Whitehaven will be including the net zero emissions by 2050 in its 2022 sustainability report?
Paul?
Thanks, Chairman. We'll certainly look at it as I say, the report's only just recently been tabled. We've reviewed the previous report, net zero emissions 2050. Obviously, all of these reports are complex, although they are relatively short on detail. I hope the reports note that available technologies and emerging technologies won't be sufficient in order to get us to there. In fact, the Sustainable Development Scenario says that 2070 is the first time through which existing technologies can get us to net zero emissions. But we'll certainly review it.
As I said earlier, it was just a matter of timing, unable to be incorporated into our sustainability report. But we'll look at it for this new year.
Thanks, Paul. The next question is an audio question from Mary Flood.
Oh, thank you, Chair. My question's about the Sharma versus the Minister for the Environment case in the Federal Court. After it was resolved, Whitehaven issued an ASX announcement stating that our current position has been that this legal claim was without merit and that the court had dismissed the proceedings. However, the court actually found a novel duty of care existed that binds the Minister for the Environment, a duty that was considered by the government to be meritorious to the extent that it's now the subject of an appeal in the full bench of the Federal Court.
The court also determined the Minister would pay the entirety of the applicant's costs. In these circumstances, does the company now accept that its ASX statement was both preemptive and misleading?
Thank you for your statement and question, Mary. A simple answer to the last part of your question is no. I'm just going to hand over to Paul for a bit more detailed comment.
Thank you, Chair. Certainly, the basis of our views was about the basis of the injunction. And so just to be clear. And also, obviously, the Minister has approved the project. And in the statement of reasons, evidencing the reasons why in her view, this duty of care has been considered in forming her view to approve the project. Obviously, as we previously referenced, the Federal Government is appealing the underlying basis of the duty of care.
So further questions in that regard might be best directed to the Federal Government.
Okay. Thanks, Paul. Next question is from Vellore Capital.
Other than debt reduction and a dividend payment, are any other capital management strategies being considered? For example, buybacks at appropriate price, special dividends, etc. Thank you for your hard work over the past year, and hopefully, you are enjoying the better times at the moment.
Thanks very much to Vellore Capital for the last part of their comments there.
Obviously, when the management of the board is reviewing capital management strategies, all those elements are on the table and under consideration, whether it's the dividend policy, share buybacks at appropriate prices, any special dividends, and how we are managing the capital structure and the demands on that going forward in terms of our existing assets, sustaining capital requirements, and the development pipeline that we have in front of us. And so all those things are taken into consideration and considered on balance in terms of the current status of the company's balance sheet and P&L. Okay. We go to the next question is from Helen Lawrence. It's a question I apologise, Helen, that you haven't been able to get through on the audio. So this question is from Helen Lawrence.
On the topic of bonds, could management explain the rationale behind only conducting the company's first bond issue now?
Why has the company previously preferred bank debt finance to bond issuance as a means of capital raising? Are bonds more expensive forms of debt instruments for the company compared to debt finance? Can you please give me a sense of the kind of interest rates that a typical bond issue would attract compared to what we might pay on a syndicated bank loan? If bonds are a less preferable option, why are we not pursuing bank debt finance?
Thanks for your question, Helen. I'll just flip that to Paul in a second. But obviously, we have a mix at the moment of debt financing facilities in terms of our senior debt facility, leasing arrangements, and the like. And we are currently very compliant in terms of all of our banking covenants.
But certainly, looking to the future, the company wants a bit more flexibility in terms of its debt structure. The company is far more mature today than what it was, say, three or four or five years ago as far as capital raising is concerned. We have, I suppose, accumulated a very good track record in this regard. And that's important in terms of getting the sorts of credit ratings that are required to go into the bond market to get competitive rates. So there's a lot of different moving parts in this. But I suppose, ultimately, we want to put ourselves in a position of maintaining the greatest flexibility as far as our debt structure and in our capital management process is concerned.
Or just, Paul, would you like to add to some of those comments? Thank you, Chair. I think just to add a couple more things.
I mean, the company's far more mature now than it's been in the past. And we have looked at this in the past to answer your curiosity about why now. Certainly, looked at it in the past. In fact, we're very close to doing it in previous occasions. And it would appear that the fear of missing out from the domestic banks conspired to then sharpen their offer to avoid us going to those markets. Now, the attraction, obviously, with the bond market is that they're very deep markets. And once established within them, having been rated, you can refinance quickly. And that suits us to have a diversity of sources of funds rather than just being captive to one domestic footprint here. So we see it very much from our perspective as being a sign of maturing of the business.
There is a small capital cost or carry cost associated with being in the bond market. But being a much deeper market, it's far more accessible to us once you're in it.
Thanks, Paul. Next question is an audio question from Joe Taban. I don't think Joe's there. We've had a little bit of a problem with some of our audio. Okay. We've now come to the conclusion of our Q&A session. As there are no further questions, I will shortly be closing voting. I ask all shareholders who have not already submitted their votes to do so now. I'll pause for 60 seconds to allow shareholders to finalize their votes. Thank you. The time for voting has now expired. I now close the poll. And the results for all resolutions will be displayed on the screen. There we go.
As you can see, resolutions two to five have been passed. And resolutions one and six have not. As a result, we will not be voting on resolution seven today. Ladies and gentlemen, that completes the formal business of this meeting. And I now formally declare the meeting closed. And again, thank you all very much for your attendance. And we look forward to seeing you again at next year's AGM. Thank you.