Coal stands firm in times of uncertainty

IN A week in which it seemed the world might be going to hell in a hand basket, the Australian coal industry kept performing and producing value for the nation and its employees.
Coal stands firm in times of uncertainty Coal stands firm in times of uncertainty Coal stands firm in times of uncertainty Coal stands firm in times of uncertainty Coal stands firm in times of uncertainty

Hogsback reckons the resilience of Australian coal will shine through in these unpredictable times.

Regardless of trade wars, the COVID-19 pandemic, and the US president getting impeached - again - the coal industry continues to operate at a high level.

This is illustrated by Coronado Global Resources, which has operations in both the US and at the Curragh mine complex in Queensland.

Coronado CEO Gerry Spindler said that, to date, a small number of the company's workforce had tested positive for COVID-19 with none reported in Australia.

"These instances occurred in the US and outside of Coronado's facilities," he said.

"All necessary steps were taken to protect our workforce and there was no community spread and no adverse impact on production."

Meanwhile, Curragh has so far managed to limit the sales impact of the COVID-19 pandemic due to the mine's unique position as a strategic supplier of "base load" metallurgical coal for coke blends.

Saleable production from Australia operations were 3.6 million tonnes in the September quarter, up 24.5% compared to the previous quarter, represents the highest quarterly production ever achieved by the Curragh mine.

Broking house UBS sees plenty of upside for major independent Australian coal producer Whitehaven Coal too as thermal coal pricing recovers as the global environment settles down after a crisis laden 2020.

"Looking at Whitehaven Coal, we see upside to earnings as thermal coal pricing recovers," it said in a recent research report.

In its latest quarterly report, Whitehaven said China's restrictions had altered seaborne coal trade flows where, instead of being delivered to China, Australian coal wasfinding customers in alternate destinations including India, Pakistan and the Middle East, and traded coal historically delivered into those markets was finding its way into China.

Following India's mid-year COVID-19 lockdown demand has rebounded strongly and it continues to be a growing destination for Whitehaven's metallurgical coal products.

Renewal of Whitehaven's term metallurgical coal sales contracts has been uninterrupted and the miner expects sales volumes in 2021 to return to pre-COVID-19 levels.

Institute for Energy Economics and Financial Analysis analyst Tim Buckley - who is normally a harsh critic of Australian coal - was upbeat about its short-term prospects.

"Even as total volume of Australian coal exports have dropped in the December quarter, the value has surged, and more importantly, the profitability much more so," he said.

"Australia sells the vast majority of its coal to Japan, South Korea and Taiwan. And if China buys more Russian, South African and Indonesian coal to replace Australian coal, then we can, by and large, simply swap customers, maybe with a month's disruption."

Hogsback reckons the resilience of Australian coal will shine through in these unpredictable times and continue to provide the backbone to regional economies in Queensland and New South Wales.