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Coronado Coal faces challenges amid global price slump

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2024-02-20

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Coronado Coal has joined the ranks of Whitehaven, Yancoal, and New Hope in feeling the pain from the slump in global coal prices. The company, which operates mines in Queensland and in the US states of Virginia and West Virginia, said Tuesday that revenue slid 19.1% to $US2.9 billion in the 12 months to December.

The main driver of the fall from 2022’s record $US3.6 billion was the decline in the price of metallurgical (steelmaking) coal, as the boost to global coal prices from the Russian invasion two years ago faded.

The company experienced a conjunction of unwanted events in 2023 and blamed higher costs, higher taxes, and bad weather for the near 80% drop in earnings.

Production dropped 1.1%, and sales by 3.4%, to 15.8 million metric tonnes.

The average price in 2023 fell 18.8% to $US215.70 per tonne from $US265.80 per tonne in 2022. Cost per tonne jumped 21.7% to $US107.60 a tonne from $US88.40 a tonne in 2022.

That saw a near 22% lift in the per tonne cost of coal and with a taxes and royalties bill of $US630 million ($A965 million) drove the miner’s full-year statutory fall to just $US156.1 million in 2023, compared to $US771.7 million a year earlier.

The company owns the Curragh coal mine in Queensland and others in the US from which it produces coking coal and some thermal coal (which is of a lower grade than coking coal).

Adjusted EBITDA fell 68.6% to $US381.7 million from $US1.2 billion in the prior period.

“In a year of sustained high met Coal prices, albeit lower than financial year 2022 levels, we were challenged by high inflation, increased taxes and royalties, numerous weather events in Queensland, and some unforeseen geotechnical events in the US,” Coronado CEO Douglas Thompson said on Tuesday.

Coal production and sales were cut over the year after mining at Curragh was put on hold for 19 days due to above-average wet weather in Queensland and poor geotechnical conditions at both its Curragh and Buchanan mine in the US.

A train derailment and delays at the RG Tanna Coal Terminal in Queensland also further slowed shipments to customers. Coronado is majority-owned by Sev.en Global Investments, owned by Czech billionaire Pavel Tykac.

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