We are a significant Australian open-cut miner and a leading metallurgical coal producer and supplier of thermal coal for domestic power generation. We operate the Curragh open cut coal mine near Blackwater in Qld’s Bowen Basin, the Premier Coal mine near Collie in WA, and have a 40 per cent interest in the Bengalla mine in the Hunter Valley of NSW. The Bengalla mine is not covered in this report as it is managed by Coal and Allied and is included in their public reporting. At 30 June 2010 we had 791 people permanently employed, 31 with the Resources divisional office, 478 with our Curragh mine operation and 282 with our Premier Coal operation. The combined coal production for Curragh and Premier Coal was 11.86 million tonnes which was 8.75 per cent lower than the previous year.

2010 has been a ‘year of action’ for the Resources Division. Throughout 2010, action was taken at our sites to improve the efficiency of mining processes, to develop our people capability, to support our local communities, to grow the business through expansion plans and to reduce our environmental footprint. Our focus on action has seen us achieve 12 of our 19 priorities for 2010 with the remaining seven priorities partially achieved. While this is a very pleasing outcome there is still work to be done, but through a commitment to action rather than words we are making sound progress in building a sustainable business for the future.

Most pleasing was our reduction from last year in greenhouse gas emissions (reduction of 5.5 per cent) and energy use (reduction of 9.3 per cent) per Bank Cubic Metre equivalent. These reductions exceeded the targets to be achieved by 2012 of five and eight per cent respectively. Water efficiency continues to be a focus with a 35.6 per cent reduction in total water use achieved compared with our baseline year of 2006.

At the heart of our sustainability strategy is the wellbeing of our employees. This year our priority was to consolidate and improve upon the safety performance we achieved last year. This was achieved with a 15 per cent reduction in our LTIFR with Curragh’s safety performance being a highlight with a 38 per cent reduction in its LTIFR to 1.5 as a result of recording only four LTIs among its contractor workforce. While this year’s performance is positive our aim remains to achieve zero workplace incidents within our division.

Sadly a contract worker was killed in a single light vehicle accident at our Curragh mine on 31 August 2010. This is a tragic reminder of the importance of remaining vigilant and focused on safety at our sites.

From a sustainable business perspective our focus was on completing the Blackwater Creek Diversion Project. This project was completed 12 months ahead of schedule and under budget. This year also saw the division receive Wesfarmers Board approval for the expansion of Curragh from 6.5 to 7.0 million tonnes per annum (mtpa) to 8.0 to 8.5 mtpa of export coal from late 2011. The successful achievement of both of these has positioned the division well for continued strong growth in the years ahead. In Premier Coal’s operations the focus has been on becoming the sole coal supplier to Verve Energy (the state-owned electricity generator) from 1 July 2010 and it has now assumed that role.

During the year the division continued to make good progress across the spectrum of sustainability objectives. This focus of growing the business in a sustainable way resulted in industry and government recognition for our performance through the awarding of Curragh as the Minerals and Energy Exporter of the Year, Premier Coal as the winner of the Western Australian Environment Award for Business Leading by Example for its indigenous aquaculture project and the Resources division as the Queensland winner of the Regional category in the 2010 Australian Business Arts Foundation (AbaF) Awards for our partnership with Queensland Theatre Company.

Our community support through strategic partnerships with Life Education Australia, Queensland Theatre Company, Blackwater International Coal Centre, the Smith Family and the Ngalang Boodja Enterprises aquaculture project has continued throughout the year. We have also supported many community based organisations as we continue to assist the development of strong, vibrant and healthy communities in which we operate.

The safety of our people remains our principal focus. This year our aim was to improve upon the previous year’s performance and as a division this was achieved with LTIs decreasing from nine to seven (22 per cent reduction) and the LTIFR from 2.53 to 2.14 (15 per cent reduction). The highlight was the significant improvement at Curragh where a 38 per cent reduction in its LTIFR to 1.5 was achieved during a period of substantial change and ramp-up within the operation. The essential factors in achieving this improved safety performance were the safety systems, supported by strong leadership, a positive safety culture and team work across site.

Throughout the year diversity has been the subject of increased attention with Curragh implementing an Equal Employment Opportunity Policy, a division wide survey of our diversity along with the development of an Aboriginal Employment and Engagement Strategy across the division.

Developing our leaders is critical to the future success of our business and this year further leadership workshops focussing on leading change, building teams, strategic planning and external relationships were conducted across our business units.

Premier Coal has maintained its EMS in accordance with the International Standard AS/NZS ISO14001 having been assessed and certified to the requirements during the year.

The Blackwater Creek Diversion Project provided Curragh with a major rehabilitation challenge with the project achieving 90 per cent rehabilitation coverage which is 15 per cent higher than required by DERM. The continual monitoring of grass and tree growth has ensured ongoing compliance with our environmental obligations.

As part of its Blackwater Creek Diversion Project, Curragh commissioned Ecofund (which provides services to its clients to meet regulatory environmental offset requirements) to identify and preserve a suitable area of brigalow woodland to offset the loss of the 220 hectares to be cleared for mining operations. The result being that Curragh, in conjunction with a landholder in Nebo Qld, preserved more than 643 hectares of endangered brigalow regional ecosystem for future generations.

Forest stewardship is an important issue in WA and Premier Coal is proactively investigating more environmentally beneficial ways to dispose of wood residue from areas cleared as part of its mining operations. Historically, a large proportion of timber has been burnt, resulting in a potential resource being wasted. Premier Coal is now utilising some of this timber as fauna habitats in rehabilitated areas while other timber is being mulched for incorporation into the soil profile of rehabilitated areas and use as a road surface in our mining activities with the result being reduced smoke emissions and improved soil quality and structure reducing weeds.

The management of greenhouse gas emissions and energy use remains one of the most challenging areas for our business. Improved measuring capability and the introduction of WESGERS is assisting our business units to better understand their emission profiles and energy use. This year both Curragh and Premier Coal instigated reviews of their mining processes to improve the efficiency of mining and in Premier Coal’s case the recovery of coal. Curragh held ‘Coal Flow’ meetings between departments to ensure alignment to the Latest Estimate plan. These meetings provide a strategy describing the priority coal, which equipment is required where and helps to ensure a reliable feed to the Coal Processing Plant.

This coordinated approach is designed to contribute to efficiency improvements in energy and greenhouse gas emissions. Premier Coal established a team of production operators, supervisors and the mine geologist to analyse the total cycle of uncovering coal and subsequent mining process to find the root causes of coal loss. This initiative has a three-fold benefit of increasing reserves, reducing energy consumption and lowering costs associated with the removal of overburden.

Greenhouse emissions

Our total direct (Scope 1 and 2) greenhouse gas emissions were estimated to be 672,426 tonnes of CO₂e, down five per cent on last year. This equates to 4.13 kilograms of CO₂e per BCM, down 5.5 per cent on last year. The greenhouse gas emissions were largely due to fugitive emissions 40 per cent, electricity 27 per cent and diesel 30 per cent.

Energy use

Our main energy use during the year related primarily to the operation of our draglines, our Coal Handling and Preparation Plant (CHPP) and diesel-operated equipment. Total energy consumption was estimated to be 3.94 million gigajoules, down 8.8 per cent on last year. Our total energy consumption per BCM was estimated to be 24.18 gigajoules, down 9.3 per cent on last year. This energy use is broken down into fuel 78 per cent of total energy consumption and electricity 20 per cent with other sources such as explosives accounting for the remaining two per cent.

Energy efficiency initiatives

Energy assessments have been conducted in accordance with the key requirements of the Federal Government’s Energy Efficiency Opportunities (EEO) program. Premier Coal has a Business Improvement program which has many elements in common with the EEO program’s continuous improvement approach.

During the year Premier Coal investigated several energy efficiency projects including a project to reduce fuel consumption by light towers which resulted in an estimated site energy saving of over 500 gigajoules per annum.

Premier Coal continues to focus on improving truck productivity, which ultimately means an increase in fuel efficiency. During 2010 a project was undertaken to improve truck productivity by focussing on the haulage of overburden over waste dumps. It was calculated that increased truck productivity due to reduced truck hours has resulted in an energy saving in excess of 2,800 gigajoules per annum for our largest shovel and truck fleet.

There were no environmental infringement notices or fines issued to either Curragh or Premier Coal. During the year Premier Coal had two non-compliances. One of these events was due to the concentration of metals discharged in water from a mine void, and the other was a technical breach as one water quality parameter (dissolved oxygen) was not measured at a site discharge point. The DEC has advised Premier Coal that no further action will be taken on these breaches.

Curragh Mine received approval on its amended EA in November 2009 from DERM. The combined EA places stringent environmental conditions on operations for the Curragh mine site.

During the year Premier Coal renewed or was granted several environmental licences and permits. The most significant of these was the renewal of the licence that permits groundwater to be abstracted as part of the coal mining process.

In October 2009 Curragh renewed its special funding agreement with Queensland Health and a consortium of four other coal-mining companies to boost medical facilities in the central Queensland region. A three year agreement was signed by the consortium for the provision of $210,000 per year to fund a second doctor’s position at Blackwater Hospital.

Premier Coal has continued to work through the complex process of handing over the former mine void known as Lake Kepwari to the Western Australian State Government. This year the Mine Abandonment Notification was accepted by Department of Mines and Petroleum and management responsibility has now been accepted by Department of Environment and Conservation.

Following the success of the Life Education Australia partnership which was launched in January 2009 we have committed a further $100,000 over two years to this leading drug and alcohol education program in central Queensland and south-west Western Australia. This initiative combined with Curragh’s and Premier Coal’s ongoing support for local health services, education, the arts, indigenous employment opportunities and local tourism initiatives, such as the Collie Visitors Centre and Blackwater International Coal Centre, has seen our business make substantial contributions to our communities.

Curragh continues to grow its business with an expected increase in Curragh mine export coal from the current 6.5 to 7.0 mtpa to 8.0 to 8.5 mtpa from late 2011. The expansion will include the construction of a new stand-alone coal handling and preparation plant as well as mine infrastructure at a cost of $286 million.

• Premier Coal continues its practice to source goods and services from local suppliers wherever possible. In addition, we also seek to provide employment opportunities for local residents. The success of this strategy is supported by the fact that approximately 79 per cent of the workforce reside in Collie.
• Premier Coal’s capital investment for the year included over $21million on major equipment, dewatering bore field and water treatment plant, exploration drilling and other infrastructure and communications.