The head of Australian miner Whitehaven Coal, Paul Flynn, is expecting a strong start to 2021 as coal prices begin to rebound from the shock of the COVID-19 crisis and Chinese government import bans imposed last year.
In the latest sign of the pricing pressure flowing through the Australian coal sector, Whitehaven reported a $94.5 million loss for the six months to December 31, down from the $27 million profit it posted a year earlier. The slump in profit, was deeper than the $73 million loss analysts had forecast for the half.
Whitehaven’s earnings slumped 79 per cent compared to the prior half, the company said on Wednesday, reflecting the steep fall in its average coal prices from $108 a tonne to $80 over the period.
However, Whitehaven Mr Flynn said markets for thermal coal, used for power generation, and coking coal, used for steel-making, were beginning to recover.
“With future savings targets identified and coal markets rebalancing in response to demand signals we are optimistic about achieving stronger outcomes through the second half,” he said.
Seaborne thermal coal markets “continue to rise” from the low points experienced in August amid supply curtailment and increased energy demand in Asia, Whitehaven said.
While Whitehaven does not have direct exposure to China, Beijing’s decision to ban Australian-sourced coal amid diplomatic tensions between Canberra and Beijing was affecting the seaborne coal market.
The miner said Asian steel-making activity outside of China was continuing to improve amid economic stimulus programs, and Australian coal was now finding customers in other destinations, including Pakistan and the Middle East.
“Instead of being delivered to China, Australian coal is now finding customers in alternate destinations including India, Pakistan and the Middle East, and traded coal historically delivered into these markets is finding its way into China,” the miner said.
“Prices for Australian origin metallurgical coal were weak through the December quarter however have sharply increased in recent weeks,” it added.
Due to the significant fall in coal prices, the board did not declare an interim dividend.
Whitehaven’s subdued numbers come after the world’s biggest miner, BHP, this week also posted a sharp revenue slide in its coal business. The company flagged $US2.2 billion in write-downs, including on the value of its thermal coal mines in New South Wales and Colombia, amid the worsening global outlook for coal.
Whitehaven’s shares initially slipped more than 9 per cent on the back of its numbers but recovered during the session to close 1.26 per cent weaker at $1.56.
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Source: Thanks smh.com