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Skills shortage, smoke stings Whitehaven

Alex Druce
Whitehaven Coal has cut its coal production outlook and increased its cost forecast for 2020

Whitehaven Coal has been punished by investors after cutting its FY20 production outlook and flagging higher costs amid a skills shortage and smoke disruptions at its Maules Creek mine.

Whitehaven on Thursday cut its total managed run of mine coal production expectations to a range of 20 to 22 metric tonnes for the year - from 22 to 23.5 metric tonnes - following events at Maules Creek caused by "ongoing severe drought conditions" in NSW.

The company said truck speeds had been reduced in low-visibility environments caused by recent smoke, dust and haze events and, in some cases, operations have been temporarily suspended.

Air quality has suffered across the state in recent weeks following widespread bushfires and continued dry weather.

Whitehaven also said it was experiencing a shortfall in experienced personnel amid challenging local and regional labour market conditions that had impacted its ability to fill rosters.

"Whitehaven expects it could take the balance of the financial year to source, select, on-board and train the necessary workers at Maules Creek in order to achieve a return to full utilisation of equipment and increase related operating productivity," the company said in a release.

The company also raised unit cost forecast to between $73 and $75 per tonne from $70 per tonne as estimated previously.

Shares in the company dived by as much as 11.6 per cent to a new 28-month low of $2.65 in the first 15 minutes of trade on Thursday.

Whitehaven shares were still 10 per cent lower at $2.70 by 1445 AEDT - making it the worst performing ASX200 company for the session - with the company's stock now having halved in value since a more than eight-year peak of $5.85 in July 2018.

Though Whitehaven's other mine sites are fully manned, there could be more pain ahead at Maules Creek.

It flagged "expectation of further disruptions at the project during the summer months".

No interruption is currently expected for FY20 operations due to water supply issues but the company will update the market if regulatory delays around further water supply augmentation measures already in train impact its revised guidance.