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COAL (100%)
Operating results at the 100% level are summarized in the following table:
Three months ended Year ended December 31, December 31, 2012 2011 2012 2011----------------------------------------------------------------------------Production (000's tonnes) 6,358 6,698 24,652 22,785Sales (000's tonnes) 6,422 5,547 23,989 22,207Average sale price US$/tonne $ 159 $ 253 $ 193 $ 257 C$/tonne $ 157 $ 259 $ 194 $ 254Cost of sales (C$/tonne) Operating $ 62 $ 65 $ 72 $ 73 Transportation $ 41 $ 33 $ 37 $ 32 Depreciation and amortization $ 17 $ 20 $ 20 $ 23Gross profit summary ($ millions) Before depreciation and amortization $ 347 $ 891 $ 2,033 $ 3,306 Depreciation and amortization (107) (110) (470) (506)---------------------------------------------------------------------------- After depreciation and amortization $ 240 $ 781 $ 1,563 $ 2,800----------------------------------------------------------------------------
Gross profit before depreciation and amortization in the fourth quarter declined compared with last year due primarily to significantly lower coal prices and higher transportation unit costs, partially offset by higher sales volumes and lower mine operating unit costs.
Production in the fourth quarter decreased by 5% compared with the same quarter in 2011 primarily as a result of our decision to reduce production starting in mid-August through to the end of the year to align with customer demand. In 2012 our production capacity increased, reflecting our growth objectives with the completion of the Elkview plant expansion and additions to the mining fleet. Our current production capacity is approximately 27 million tonnes and is expected to grow to 28 million tonnes by the end of 2013. However, to align production rates with anticipated demand and to effectively manage inventories, we plan to produce 24.0 to 25.0 million tonnes of coal in 2013.
Production for the first quarter of 2013 is not expected to be materially impacted by the damage incurred in December to Berth 1 at Westshore Terminals. We will use alternative shipping options for the duration of the repairs at Westshore, including securing additional capacity through Neptune Terminals, Pacific Coast Terminals and Ridley Terminals. On the basis of Westshore's estimated repair schedule for Berth 1 and expected loading capacity for Berth 2, we expect to have total shipping capacity of approximately six million tonnes in the first quarter of 2013, although shipping capacity in the first quarter can also be affected by adverse weather conditions.
Coal sales of 6.4 million tonnes in the fourth quarter were 16% higher than the same period last year and exceeded prior guidance of 6.2 million tonnes. The average coal price of US$159 per tonne in the fourth quarter was 37% lower than the same quarter a year ago and reflects the weaker steelmaking coal market conditions. The increase in sales volume predominantly reflects strong demand for coal delivered to China, partially offset by lower demand in our traditional markets. Sales to China in the fourth quarter reached a record high level. However, the ratio of Chinese sales to total sales in 2013 is expected to decline to be similar to what was experienced in the first three quarters of 2012.
