Whitehaven Coal Limited (WHC) Earnings Call Transcript & Summary

Good morning, everybody. Thanks very much for dialing in for the September quarter 2024, the first quarter of the new financial year. As usual, I'll go through our report, and then dive into the Q&A. And I'm joined today, as usual, with Kevin Ball, our CFO; and Ian Humphris, our COO; and our Investor Relations team. So look, I'll just go through the highlights quickly for you. It's been a terrific start to this new financial year with the enlarged business. So I'll go through the group results, then we'll dive down into the state-based outcomes. So group safety is certainly looking very good. It is, as you can see, for those who have been watching from the last quarter, being the first of the enlarged group. It's essentially an average of the New South Wales and Queensland results, as you can see, at 4.4 TRIFR -- 4.5, sorry. It's really the central point between where we finished in June at 3.3 for New South Wales and 6.6 for Queensland. So heading in the right direction, but more work to be done in that regard. All mines are performing well and all on plan, if not better, in fact. So very positive in that regard. Our managed ROM totals of 9.7 million tonnes for the quarter, certainly a very good result, and comprising our ROM totals of Queensland at 5.3 and New South Wales at 4.4. Total equity sales of produced coal, 6.4 for the quarter, slightly down on quarter-on-quarter with June, but June, obviously, was a big quarter. Queensland sales at 3.6 there, of course, and New South Wales equity sales at 2.8. Revenues for the quarter, the split of those, 64 to 36. Unit costs are performing well. So we're actually tracking down the bottom end of our guidance, which is very positive. More to talk about that as we make our way through the discussion. Net debt consistent with where we want it to be. So that's actually improving. And of course, during the course of the quarter, we announced the sell down of 30% of the Blackwater mine. And we're expecting the proceeds from that sale to be in the bank in Q3 FY this year, FY '25. So a very good start to the year. To say, all mines tracking very nicely, doing what they should be doing. And in the case of Queensland, better than planned. So over the table there, you've got all the results there. I won't go through them all for you. I know you can do that in your own time, but you can see the comparison between June quarter, as I say, New South Wales always a big quarter in Q4. And Queensland, certainly, we're happy with the June quarter, and September is continuing that very positive momentum forward. So Queensland ops, as I say, very nice to see that continuing to improve with 5.3 million tonnes of ROM, that's 11% up on the June quarter. So a very, very solid outcome there. And I know everybody has been watching -- wanting to watch the splits between the 2 mines and of course, the railings at Daunia have significantly improved. As we said, that we're already dealing with that, and that certainly has delivered a much better outcome, which is reflected in the 17% quarter-on-quarter increase in Daunia's sales. Our efforts to improve and reshape the business are ongoing, and our management teams are well entrenched now in the business, having been all installed during the course of the quarter. And team is doing very well at both sites. It's very positive to see the momentum that they're building. And you can see the outcome of increased production with stocks at a healthy level. That's nice to see across Queensland at 2.3 million tonnes, and that's reflected across the progress on both sides. So very good. So the efforts to build our blasted inventory and also our stripping inventories are certainly underway and cost initiative outcomes for the Queensland business. We feel confident that we're building nicely to the annualized run rate revision of 100 million tonnes -- $100 million by the end of FY '25. As I say, Daunia in the September quarter very, very good, 1.6 million tonnes. That's a big step-up from where we were, obviously, for the last quarter. And as I say, importantly, management of the pathway constraints that we had experienced in our first quarter of ownership in the June quarter have not only been addressed, but we're continuing to optimize that. So we're actually delivering ahead of schedule, as you can see, which is very positive. Blackwater doing very well. So consistent with the June quarter, 5% higher. It's nice to see. And we have -- we are continuing to optimize that site and also deal with those matters that we said that we wanted to do via the increase in blasting stocks and also the pre-stripping capacity. So the first of those 2 800-tonne diggers that we have ordered for to augment the pre-strip capacity has walked off its commissioning pad during the quarter. So we'll see the benefit of that now flow through the balance of this year. So we're very pleased with Queensland, definitely doing a good job. New South Wales running according to plan, which is very nice to see, as I say, all mines doing exactly that. The ROM totals for the quarter for New South Wales is 4.4 million tonnes. So that's down on the June quarter, but we all acknowledged that June was a large one, and that this is in accordance with the phasing of our plan for this year, and I'll go through the mines quickly. Sales of produced coal, 3.5 million tonnes, 16% lower, in line with obviously, the lower ROM targets for this quarter, but as I say, in line with plan. Maules Creek at 2.2. This is, again, consistent with the theme, lower, but in accordance with the plan. And the reason for the lower outcomes at Maules is, as you know, we finally finished mining out the Southwestern corner of Maules Creek. So that liberated dunking capacity. So we now turned our focus to the increasing strike length to the north and the east. And so there is a little bit more stripping involved in this quarter, a little bit more in the next quarter. But you'll see an even spread of the coal pretty much over the next 3 quarters, which, as I say, in line with the plan. Narrabri, look, consistently has not been necessarily its best in previous past, but June was good, and this quarter certainly is very good. So we are building momentum here nicely. And what we are seeing is improvements in reliability just from the focus on the mechanical health of the longwall. And so nice to see consistent production coming through there at 1.6 million tonnes up on the June quarter. So -- and of course, we'll see this quarter, a fully productive quarter, then we'll have Q3, which will involve the change-out period, which will be a little bit longer than normal. So because we've got 2 extra weeks budgeted in our change-out, as I said, in the previous quarter, we will be bringing a good number of the chocks to surface for overhaul on surface. So we've got an 8-week change-out in Q3 that you should factor into your numbers. GOC is doing what it needs to do. There's -- we are chewing through the hill of Tarrawonga. And so as we said before, we are in a period of higher stripping there at Tarrawonga. But between Tarra and Vickery, they are doing what they need to do. So a solid start to the first quarter of the year. I am over the page into coal sales and realized pricing. As I say, September equity sales of 6.4, a very good result, consistent with where we've been in June. And so I think it's -- overall, we're very pleased with the results. The average price realized there for the Queensland operations at AUD 259, and we wanted to give you some splits here that so you could use that for your modeling. So if we're looking at how that factors down through the realized prices for Queensland across the quarter relative to the PLV hard coke price, that was $176, so 84% of the Platts PLV hard coke price for that same period. Now in terms of splits of coal sales of Queensland, 55% was in the hard coke and semi-hard complement of the total sales there, 43% was in the PCI and semi-soft. So the PCI and semisoft achieved 75% of PLV and the hard coke and semi-hard achieved 91% of the PLV hard coke, and the balance being a high-quality thermal tertiary product that comes out at the back end of the process. So good realizations and solid results overall. New South Wales, of course, has had, from a price perspective, a relatively static period. So quarter-on-quarter has been pretty flat, but flat in a very positive way because the prices are pretty good, despite the fact that the market is still relatively subdued. And so an average price of AUD 211 for the quarter is consistent with the previous quarter. And the realized price there, pretty much bang on with the -- just slightly below our gC NEWC outcome in total. There's a table at the back of the document for you to look at the various realizations from the various products we have. But yes, a good result overall for the September quarter, USD 139. From a market perspective and the outlook, I think both sides of our business are interestingly positioned in very supply-constrained dynamics, both on the thermal side and also the met side. And we are in a shoulder season from our thermal side anyway. So you would be expecting relatively subdued prices, but the price on the thermal side of the business has been very positive. And we are seeing incremental purchasing out of that, out of Japan, in particular, on the high CV end of the market. From the met coal side of things, of course, there's a number of different discussions. And you've seen some announcements from China during the course of the last few weeks about stimulus. And it will be interesting to see how that plays out in terms of something more substantive than what's already been announced. But we are -- as I said in the previous quarter, we are now seeing incremental buying from the Indian side of the market, which seems to be coming out of its monsoon period. And notably, in the last month or so, we see a lot of trader activity trying to take up a lot of the volume in the market. And that type of behavior is usually indicative of them trying to front run an increase in coal prices. So I think we're well positioned there, and the market will turn as the Indian buying gains momentum. And as we see, China and its stimulus efforts take more hold. Whilst this is a production report, we know we need to give you some -- a bit of guidance on where we're going cost-wise. We configured our guidance broadly off the back of conservative position guidance at 140 to 155. And we are tracking well. And so the cost out initiatives and the productivity gains that we're seeing across the business are improving, particularly in Queensland. And so we are tracking towards the bottom end of our guidance, which is very positive. And if I look out across the year, I think that will continue to improve as the cost out initiatives gain further momentum as the productivity improvements that we're seeing take greater effect across the course of the year. So I expect that we'll continue to improve in that regard. As I said before, we're comfortable with the rebasing of the cost base by 100 million tonnes -- $100 million by the end of the financial year. We get a lot of questions about royalty, so we thought we'd just add in the royalty number per tonne. That's the -- obviously, the blended outcome across the group at $30 a tonne. And so tonnes that buy your volumes, we are definitely kicking the tin for both state governments in providing plenty of royalty revenue for them. Now lots of inbound questions, of course, on the contingent payment structure, the upside sharing arrangement that we have in place with BMA. And so we thought we'd give you a little bit more information here just for your reference. We can probably trim that down in later reports, but at least we'll give you the boots in all version to start off with. So just to recap on this. We're sharing the upside, 35% of the revenue over and above USD 159 in this year. And for the 2 years subsequent, USD 134. Now that is capped at USD 350 million per year, a total cap over the 3-year program of $900 million. Now what you don't get in 1 year, you can't get in the second. So it is capped each individual year at USD 350 million. And it is the realization, $159 realization across the 4 products -- the 4 main products that we sell. And so what we've done is given you an indicative calculation here, so you can see how this plays out. Broadly, by reference to the $350 million potential payment, we are tracking off the back of this quarter to about 1/3 of that overall. So this is designed to give you risk mitigation on the downside, but obviously upside sharing in the event that prices go higher. So you can see there the amount payable to BMA, and this is subject to obviously, verification. But in broad terms, you can see we're tracking at USD 44 million more or less. If you think about 1/3 of the total is where we're tracking based on the prices that we see today. Now that is on the anniversary of the transaction, so 2nd of April -- through the 2nd of April, but is actually paid in July -- or 3 months later, allowing time for everybody just to be happy with the calculation and then payment that will be made. So that just -- hopefully, that satisfies everyone's curiosity in terms of how that's going and how it functions. But if there are any further questions on that, we can deal with it as well. But $0.35 in every dollar over 159, and that is the realized price of all product outcomes over the 12-month period from the anniversary of the transaction. Now of course, in the quarter, a significant highlight is the signing agreement for the formation of a joint venture around Blackwater. Now that's a terrific outcome for us. We're really pleased with it to have 2 Tier 1 end users in Nippon Steel and JFE wanting to take a piece of Blackwater and secure offtake for themselves. You saw the announcement -- you saw, obviously, the price realizations that we've been able to achieve. So I have some premium on what we paid, and really reflective of the desire of the end users to put their foot on volume. In any market, they understand, as well as we do, that is certainly supply constrained. And so certainty for them of the offtake is front of mind. So we're very pleased with the fact, I was in Japan early in the week. And 2 happier incoming joint venture partners, it would be hard to find, I say. So very, very good to see that come to fruition. And as I said before, we're expecting completion and money in the bank in Q3 FY '25. Quickly on the development of projects. I'll just focus over the page. Quickly on Narrabri. That's been the highlight for the quarter. So at long last, despite the legal wranglings that have been going on, vexatious claims that they may well be. They do consume time. But fortunately, the Federal Minister has finally cleared the way for the Narrabri Stage 3 extension project. So nice to actually have that now in your pocket. Arduous process it has been. Now what that does mean is that there have been some delays. And I've said before, that the period for a walk-on, walk-off type scenario, from a longwall perspective, that window is now shortened because of these delays. So we don't think actually that's a prospective. So that capital will be pushed out. And so our anticipation is to come back to you with capital guidance for the second half -- oh sorry, when we announced the results for the first half on the capital required for Stage 3. Now that -- when I say that window is closed for the walk-on, walk-off scenario, that means we -- there's no immediate need for a new longwall. So we will continue to use this longwall and examining options as to whether there's actually -- that longwall can be used for the remainder of the mine's life. But, as I say, we'll come back to the market, with the half year results on the outlook for capital for Narrabri in Stage 3 in particular. Winchester South, nothing particular going on there, other than, again, consumption of available resources in preparing for the normal legal wrangling that goes with the approval of -- the state-based approval for Winchester South. Very happy to see it. But obviously, anybody who's raised objections during the exhibition period has an opportunity to chance their arm in court, and we will be defending the project vigorously. And in the meantime, obviously, pursuing the EPBC approval as fast as we can. So with all that, very good quarter on both sides of our business, New South Wales and Queensland, very pleased with that. I'm sure there'll be lots of questions. The guidance remains unchanged. As you can see, we're tracking well on all respects there. We've got the production table there at the back of this report. And then over the page, there's also the equity coal sales and realized pricing table for you. So with that, we'll bring it to a close, and we'll get the Q&A session going, please, operator. Thank you.

[Operator Instructions] Your first question comes from Rahul Anand from Morgan Stanley.

My first question was around your saleable production versus ROM coal production. So there seems to be a bit of a mismatch there. Is there any color you can provide on that in terms of this timing impact? Why you're trying to build some ROM inventories that are going to stay with us for some time, so there might not be a full reversal in the coming quarters? That's the first one.

Rahul, could you be a bit more specific just with that? Are you talking about Queensland, in particular? I think that's what you're talking about.

Even at the group level, Paul, if we look, you did 9.6 million tonnes of ROM coal production. Saleable coal production was about 7.1. And then obviously, you had a bit of a mismatch across assets. So I was just trying to figure out whether there is some kind of a ROM build here? Or is this going to be -- or is this purely just timing?

Look, I think I'll just pull it apart. I understand where you're going with that. So there is a tale of 2 stories, of course, now with a much larger business. New South Wales is proceeding as planned and it's not got a lot of stock. In fact, we will be intending to build a bit of stock during the course of the balance of this year. So there's a relatively seamless, if you like, delivery of ROM production through the washing process. Obviously, with the yield difference gives rise to the saleable and off it goes into the customer ship. In Queensland, of course, we're outperforming, and that's very good. And that's nice to see the build of stock. We pulled that down very quickly, obviously, with Daunia because we were railing at a rate above -- at above the monthly and quarterly rate that you would expect us to see. But of course, both mines are performing nicely. So it's really just a matter of the sales team, keeping in front of that. So there's not an intent to build stock for any impending reason. So it's really just the fact that these mines are gaining momentum, and the sales profile will just play out the way it should. So it's really just a timing issue, but a sign of success, I have to say, from the Queensland operations that are outperforming.

Excellent. Okay. And look, the second one was just around production. So if we think about Narrabri, you flagged an additional 2 weeks shut. So I just wanted to get a bit more color in terms of what that will achieve. Obviously, the mine performed quite well this period. And then just a follow-up there on Maules. In terms of the Maules mine plan, was there any change? Because we received guidance very recently. And at that time, it wasn't flagged, but it was a first half, second half split. So I just wanted to know sort of how that came about.

Yes, I'll deal with that in the 2 parts that it comes, Rahul. So Narrabri, doing nicely. As you can see, consistent which is what we want. So slightly up on the last quarter, which is nice. You've essentially got this quarter before we move into the change out. And so you'll see us chipping away there. More or less, we're expecting the change out to commence around the end of January. And so that gives you essentially a 4-month -- this quarter, plus a month of production before you move into that 8-week period. As you know, that's normally 6 weeks, but we banged another 2 weeks on the end of that because we do want to bring some of those chocks to surface as we mentioned. Some of that work is difficult to conduct underground, so it is better that we bring some of them up. So that's why we put another 2 weeks into the schedule. That should see us with a quarter remaining of production in the year. So that looks pretty good. As far as Maules Creek goes, no, we didn't give guidance about phasing, never do, quarter-to-quarter. But there's nothing -- no particular change at Maules Creek that anyone should be worried about. It's just that as -- for those who recall, the shape of the mining lease at Maules Creek, it does pinch down into a point down in the Southwest corner. We've been obviously working feverishly to try and clear that out because that is critical for in-pit dumping capacity for the mine in the short to medium term. And so all our efforts were devoted to making sure that we cleared out that area, which we had done. And now we can redirect our focus on stripping capacity to extending the strike length of the mine, which is going to be a productivity benefit. And so moving into the North and East. So it is just a timing-related matter, but it's important work. And you'll see the benefits of it over the balance of the year and years to come, because improving the strike length will make the mine more productive. So no, sorry, we didn't give you any quarter-on-quarter guidance, but -- well, we have never done that, but -- so the numbers at 2.2 is certainly a little lower than what you would have seen. Obviously, Q4 is large. Q4 will be big in this year also, but that is according to the plan. So moving all -- as I said, all the mines are doing what they are supposed to be doing in the accordance with those plans.

Your next question comes from Paul Young from Goldman Sachs.

First question on Blackwater, had a really good quarter from a run-of-mine perspective. And I know you've spoken about 2 excavators that you're commissioning this quarter. Is there anything else you want to call out from a perspective of just 1 quarter in now of owning the asset into the new year. Just how the dragline fleet is performing all the -- and pre-strip trucks and coal mining trucks. Anything else to call out on that asset? I mean considering that I think after this quarter, it probably actually should do better for next quarter.

We are gaining momentum, Paul. Look, it's very pleasing to see the team is doing a terrific job. We've had 2 quarters now of ownership, obviously, only one in this year. But the June quarter, we're very pleased, and that was a nice step up on what the mine had been doing for the previous 9 months and prior to that. So productivity improvements are good, and that's even before you actually see the benefit of the extra stripping capacity that we're bringing online here. So nothing particular going on there, other than just it is a -- that people are very enthusiastic and they're wanting to see the mines succeed. And despite the fact that we are doing some heavy lifting there in reshaping both mines, the Blackwater, of course, I just think that it really does bode well for future quarters and years because we're starting to see the plans being executed in accordance with the way we'd like to see it done. So look, very good signs. There's nothing in particular. Ian, anything you wanted to add?

No. Obviously, we talked about changing the blasting -- the contractor that went successfully. And we thought we'd use the opportunity of the dry season to actually bring some more capacity in there, and that's gone well. So I mean that's obviously the prelude to getting the blasting done before we can then build on the overburden in advance going well.

It's Paul. Ian is commenting not just on the stripping there, but of course, the blasted inventory, we want to increase. Now we inherited a lot of drilled ground, but not blasted. And so with drilled ground just sitting there, obviously, if you leave, the drilled hole sitting there for an extended period of time, you may have to go back and do more of them. So what Ian is referring to is, and what we've noted in the quarterly report, we brought in a second explosive provider, which is allowing us to load holes during the night. And because we do want to let this ground go and blasted before the weather season comes and make sure we've got all that blasted ground ready to be stripped. So they are very positive initiatives and the teams, as I say, enthusiastic. And they're encouraged by what they are seeing they're able to achieve.

Okay. Good stuff, Paul. And second question on sales volumes and also cost guidance. Just sticking with Blackwater, sales improved, but just based on the Gladstone export data during the quarter. I thought Blackwater has done a little bit better, but that's a timing thing. It's a big mine. So the sales probably will come through. But your unit costs are based on sales volumes, not production. So the fact that sales at the group level were probably in line with what everyone was expecting, that probably tells me that your absolute costs are probably coming in a little bit under to -- versus expectations. Is that correct? So if you can just maybe help us all just around why are costs tracking to the bottom end? Is that -- I presume it's Queensland and absolute cost coming into the numbers?

Yes, yes. Look, you're bang on there, Paul. I mean it's a convergence of factors, as you mentioned there, I mean building momentum, of course, so that's great. So the sales volumes, as you say, we've got good stocks now down at Gladstone. So you'll see that materialize in the coming quarter. So very, very positive. Productivity improvements are bringing those costs down anyway. Then on top of that, there's the overt cost reduction activity that's going on there as well. So the convergence of all of that, as you say, the cost line is driven by the sales line. And so the opportunity for further downward pressure on the cost is definitely there.

Your next question comes from Jonathon Sharp from CLSA.

Just the first question, just with the BMA payments. I suspect I know the answer to this, but I just wanted to confirm it. So you'll have to make 100% of the payments to BMA and not 70%. Can I just clear that up, please?

Yes. Yes, that's right, Jonathon. The liability sits with us with the BMA. So the incoming joint ventures, obviously are paying their share and paying their share based on the price that we've struck. So we will be liable for that. But we are taking that money off the table from them, obviously upfront as part of the purchase price consideration, which will conclude in Q3. So we will have their money for the entirety of that in the bank. And I know that, obviously, it's not -- they also had to take a view on the upside sharing arrangement. So included in that is a portion of that. And obviously, it's tracking to lower than expected, which will be an opportunity for us to do better as a result of that as well. Now obviously, we'd be incentivized to pay the whole thing, but that mechanism is designed to obviously, minimize the downside in a lower price environment. And -- but the price we were receiving from our new friends is inclusive of the view that they talk at the time of the sale, which is higher than what we're ultimately paying at the moment. Does that make sense?

That makes complete sense. And just a second question on Narrabri. So that makes sense you're going to 8 weeks with just how many supports are coming to the surface even just percentage-wise? And can I just confirm it isn't due to any development discontinuity. Is it hydraulic health? And just with that, will it be hard stop after 8 weeks? Or is timing dependent on maintenance completion?

Okay. I'll have a crack at answering the 3 of those. So circa 80 chocks coming to the surface is a varied program. I think sort of roughly 20 got a little bit of structural work and some hydraulics and the others are hydraulic hosing. We've done a lot of that hydraulic hose type work underground already as we flagged. So that's the answer to that. Look, unfortunately, you can't just say there's a magic stop date for a longwall move. I mean you've got to have it all in there and get it running, but there's been a lot of work done by the teams. I mean we've sent -- we do have a few spare chocks. They've been sent to the offsite repair places, and we've done some practicing to figure out how long that's going to take and capabilities and all the rest of it. And we are sharing that workload against a couple of facilities. So I'm confident that the work is being done in the background around that. And there was a third question?

Development flow.

Development flow, that's not an issue. The block is ready to go as we speak now, the next block. So that's not a problem.

I think just the only thing to add there is just as Ian is alluding to, there's obviously -- you've got to share the labor and the actual equipment to bring chocks to surface, and that's not something we hold on site every day. And so a lot of work has gone into making sure that when we schedule our change out, it's not obviously clashing with anybody else's change out at the same time who uses that same equipment or the same service providers. So we are in a good zone in terms of being able to procure the labor we need and also the equipment for transportation of the chocks to surface to be able to get that done in the time period we're allowed. So as I say, there's no hard stop because -- but that's -- we've allowed an extra couple of weeks for this important work, and we believe that's sufficient to get it done. And the team is very much focused on making sure that all the procurement activities and the parts and labor are all there well before the change out commences.

Yes. And I think unlike the previous move, where we were really moving the longwall block from the deepest part of the mine, all the way up to the shallowest, we're really just moving to the adjacent block. And the stuff that's got to come to the surface is the block basically is the bottom of the drift. So it makes some of that process easier.

Your next question comes from Rob Stein from Macquarie.

First question, just on realized pricing. So note that your sales mix for Queensland in the quarter was 55% of Queensland operations, yet you still achieved a number pretty close to 85%. Can you just provide a bit of comment on that, given that the acquisition deck had a much higher target of HCC mix that similar types of realization?

Yes, Rob, there's a bit of timing in that. And just to go through the numbers just quickly for you. Again, of the met coal out of Queensland, the percentage split of the met coal was 45 hard coke and semi-hard, and they realized 91% of the PLV hard coke And the semi-soft component of that, the 43% of the met coal achieved 75%. And obviously, there's a balancing thermal component of it, 2%, that I mentioned there before. Overarchingly, we've achieved -- when you aggregate all that together, we've got 84% realization of the PLV hard coking price. Now in terms of product splits, there's always a little bit of timing in that. And this quarter does have a little bit more of Daunia in it, of course, because we've recovered that ground that was -- that we weren't able to deliver in the June quarter because of the pathway issues that we've previously discussed. But we're pretty much on track with the splits that we've given you in the past. And -- but there will be timing differences from time to time in all of that. So -- but overarchingly, we want to make sure that everyone understands the product splits and also the realization relative to the PLV hard coke in aggregate and separately between the 2 primary products out of Queensland, so that you can do your modeling.

So fair to say, even with the time lags on pricing and the like, if you were to trend up that 65 target, you should sort of realize closer to that 90 -- I know you range at 85% to 90%, but you should achieve a number a bit higher to that 90% mark.

For the hard coke. For the hard coke.

For the hard coke, yes.

Yes. Don't forget. So Daunia has the better quality thereof. And so Daunia certainly achieves that level. And then you've got to blend that in, obviously, with a semi-hard. And we've given you the realizations for the semi-hard as well. So you're going to have a blended outcome between the semi-hards, which is in the early '80s and the Daunia hard coke, which is around 90.

Okay. And then just on Maules Creek. I note that mine plan sequencing is never smooth. Even on a quarterly basis, it can be quite lumpy. Can you sort of provide an indicative profile for the rest of the year around how you would expect to see that sort of get back to even if it's flat year-on-year production?

Yes, yes. Look, I understand there a few questions about that. It is according to our plan. So we're not concerned at all. That's just the phasing of the mine. The split on a half-to-half basis is actually about 45, 55 at Maules, just so you've got a reference point. But as I say, it's really just us opening up the northern extension. So that's going to be a productivity benefit for us overall. So it is in line with our plan. But yes, it will be 45, 55 from a Maules Creek perspective for the year.

Your next question comes from Lyndon Fagan from JPMorgan.

Yes, first one I've got is just on the Blackwater sell-down. Is there any tax on that?

Yes, there is, Kevin.

Yes, yes. So the $1.8 billion, I think next to about $1 billion after. That makes the math easier, Lyndon.

Okay. That's a good one. And then just on the Queensland cost out, you've talked about headcount reduction. In terms of the initiatives this year that are leading to the saving, do you mind just giving a bit more color on what that is?

Yes, I'll start off, and then Ian will jump in with some of this. I mean there's a range of programs going on there, Lyndon. So obviously, when we took the assets on, we took them as they were. And so that's everybody and as it was, and acknowledging that our business is configured a little differently to how these assets were run in the past. So there's going to be obviously some refinement that was required. So that does -- in that instance, it does mean some restructuring, and that's unpleasant work, but we are doing that. And you would have seen a round of that already, and there is further ongoing as we speak. Now there was some duplication that came with it just because of the collapsing of [ OS into EA ] brought about duplication there in the first instance, which needed to be dealt with. So that's just an example of the areas that -- but it's across the business. And so we are trying to proceed across the business divisionally in a way that's not too disruptive. And I think that is being achieved because you can see the productivity of the mines, both of them have lifted as a result. But there is further work here. So it's just the productivity side of it will obviously bring cost reductions as well. And then, of course, our procurement team are looking at all the opportunities to try and find ways in which we can take advantage of now the enlarged scale of the business. So it's not to say, in all ways, we're going to be able to approximate what BMA was necessarily able to achieve across their group. But adding in New South Wales into the procurement that we've got, we'll see opportunities as well. Ian?

Yes. So sort of just building on what Paul said there. I mean we've got a structured program in place. And obviously, some of the initiatives that are a little bit more complex will take a little bit longer. But specifically, I think, you were asking questions about headcount. We flagged to you initially the first round of restructure was, I think, around about 190 people. That's largely occurred now. There's still some tailwinds with a few of those things, but largely done. And we are in the early stages of, I guess, restructuring our asset management part of the business across sites and the group roles, and that will lead to a reduction just over 100 people, and that's been worked through as we speak now.

And on top of that, Lyndon there's...

Attrition.

The attrition that features as part of the businesses since the time that we agreed to buy it. So we've been also allowing that to do some of the work for us as well. So the numbers that Ian just recounted to you are the numbers of initiatives explicitly that we are driving since our ownership, but we've been allowing the attrition also to assist us in that regard on top of that.

Yes, thanks for the detail. Just a quick follow-up. How much of the savings relates to people cuts?