Coronado considers switch to satisfy thermal coal demand

It’s been a good half year for Coronado and they are looking for more. In the environment of higher prices for thermal coal, the company said it was considering switching certain US high-vol and Australian PCI/semi-soft metallurgical coal products to the thermal market. It’s outlined in the company’s half year result and follows reports this morning that Glencore had struck a deal with Nippon Steel Corporation locking in a US$375/ton thermal coal price for the next 12 months. The company owns the Curragh coal operation in the southern Bowen Basin and seven mines in the Central Appalachian region of the United States. It mines about 80 per cent metallurgical-grade product. Record profit It reported record half-yearly results to the ASX this morning including revenue of $US1980 million. The adjusted EBITDA of $US849.3 million was a 3204.7 per cent improvement over the same period 12 months ago. The record group revenue was attributed to the strong averaged realised metallurgical coal price of $US293/tonne. The company recorded a $96.1 million net loss in HY21. Coronado had distributed $US351 million in cash dividends to shareholders while remaining in a net cash position, managing director and chief executive officer Gerry Spindler said. Coronado managing director and chief executive officer Gerry Spindler. “Coronado’s half-year adjusted EBITDA eclipses the highest full-year adjusted EBITDA ever reported in the history of Coronado,’ Mr Spindler said. “These strong results are due to the higher price environment, which has resulted in record price realisations for our high-quality metallurgical coal products, but also from the structural changes made to our business over the past 12 to 18 months that have allowed us to take advantage of the improved markets. “We have improved our reportable safety rates year-on-year; released our fourth sustainability report in which we include emission reduction plans and targets; completed critical planned maintenance activities; improved performance at Curragh from our draglines and newly transitioned fleets under Coronado management; entered the S&P / ASX 200 index for the first time; and continued to reinvest in our business via capital expenditure to secure future production plans and growth.” Wet weather which impacted production in Queensland along with inflationary pressures on labour, transport, materials and supplies would need to be managed, Mr Spindler said. Switch to thermal production Despite that Mr Spindler said diverting more product to satisfy demand for thermal coal would help maintain higher returns. “As we look to the second half of 2022, the prospect of strong financial returns remains despite recent reductions in metallurgical coal prices,” he said. “Thermal pricing remains at significantly elevated levels, and we will divert metallurgical tonnes into thermal markets to achieve higher realisations where we have the flexibility to do so. “Coronado’s capital investment in its operations drives the second half weighted production plans, which we anticipate will see us deliver production levels exceeding 2021 levels and lower second half costs. “I remain extremely confident in our ability to weather the headwinds and continue to provide enhanced value and returns to all shareholders.”

Coronado considers switch to satisfy thermal coal demand

Industry Queensland

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