(Bloomberg) – China’s ban on imports of Australian coal has proven to be a boon for Sydney-listed Coronado Global Resources Inc., one of the world’s leading producers of the metallurgical variety essential for making coal. ‘steel.
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With mines stretching from the Appalachian Mountains in the United States to the Bowen Basin in Australia, geographic diversity helped to boost Coronado’s realized prices by 37% for the September quarter, which saw its sales increase further. a third.
While the company’s giant Curragh mine in Australia is currently shut out of Asia’s largest market due to a diplomatic row between Beijing and Canberra, Coronado is more than making up for that with shipments from its U.S. operations, according to its Managing Director Gerry Spindler.
“We would never have predicted the tradeoff, or the circumstances, which currently make it not only an advantage but an overwhelming attribute” to have such production diversity, Spindler said in a telephone interview from the base. the company in West Virginia.
For Coronado, the surge in income marks a sudden turnaround in fortunes. The company temporarily suspended its U.S. mines in March last year after pandemic shutdowns crushed demand. It also raised A $ 250 million ($ 188 million) in a heavily discounted stock issue last August amid the market fear of breaching debt covenants.
Today, the miner is reducing debt at a rapid pace and could have positive cash flow by the end of the year, he said in a production report on Thursday. While Coronado shares fell 6.9% in Sydney on Thursday, reflecting a sharp drop in coal prices in China on Wednesday, they are still up around 30% year-to-date, giving him gives a market value of A $ 2.36 billion.
READ: Record US coal shipment to China highlights Australia’s pain
Steel coal prices have increased this year due to strong demand from China and limited supply in many key producing countries. Still, the rally faces headwinds after Beijing began a political blitz aimed at bringing prices under control and easing the country’s energy crisis.
“Having been in the business for a long time, you have to view the current price points as high,” Spindler said. “You have to expect bleeding and be prepared for it. “
As for China’s ban on Australian coal, Spindler said he doubts Beijing will lift it anytime soon. “But in the long run, it’s safe to say that China cannot adequately support or increase its current level of steel production and keep the ban in place,” he added.
India has become the main destination for the company’s coal from Curragh in Queensland, with strong demand also coming from across Asia, Spindler said.
Another U.S. coal producer, Peabody Energy Corp, reported earlier this week its strongest sales run in seven quarters, supported by rising thermal coal consumption by domestic power producers and increased demand for international shipments.
Coronado is also thriving in the US market, where it sells about a third of its product from two operating mines in the central Appalachian region. It has fixed price contracts with domestic customers for fiscal 2022 at levels $ 100 per tonne above the volume weighted average price reached in fiscal 2021.
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