BMA's Australian coal at low end of output target
BHP Mitsubishi Alliance's (BMA) Australian coal production is trending towards the bottom half of its decade-low guidance for the 2023-24 fiscal year to 30 June, as heavy rainfall disrupts production.
BMA, which is 50pc owned by Australian resources firm BHP and 50pc by Japanese trading house Mitsubishi, cut its 2023-24 guidance to 46mn-50mn t of metallurgical coal in January from the previous guidance of 56mn-62mn t issued in July. But heavy rainfall so far this year means it is trending towards the lower half, according to BHP chief executive Mike Henry.
The firm was already operating on low inventories because of higher than average rainfall in 2022, as the La Nina weather pattern delivered increased rainfall to the east coast of Australia. This meant that heavy rainfall in 2023 and early 2024 has quickly flown through into disruptions to production, although the firm is working on building inventories through the system, Henry added.
The wet end to 2023 and start of 2024 was not expected because of the El Nino weather phenomenon that typically drives drought conditions on the east coast. The atypical wet weather has prompted US-Australian coal mining firm Coronado to factor in more heavy rainfall disruptions in Queensland into its 2024 guidance.
Around 3mn-4.5mn t of BHP's cut in BMA guidance is because of the planned sale to Australian mining firm Whitehaven of its Blackwater and Daunia coking and thermal coal mines in Queensland, which is on track to be completed on 2 April. BHP estimates that the sale will increase its proportion of premium hard coking coal so 86pc of its Queensland coal sales from 64pc now and 55pc prior to its sale of its 80pc stake of BHP Mitsui Corporation to Australian independent Stanmore in 2022.
Henry remains optimistic on the outlook for coking coal prices, with demand growth from India and a muted supply response. But he argues that an effective tax rate of 62pc in Queensland following higher royalty rates imposed in July 2022 makes it an unattractive investment opportunity.
BHP despite the lower production outlook retained BMA's cost guidance, which it revised in January, for 2023-24 at $110-116/t.
The Argus premium hard coking coal price averaged $295.86/t in 2023, down from $365.60/t in 2022 but up from $223.16/t in 2021 and $124.26/t in 2020.
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Australian coal rail line to shut for 2 weeks: Coronado
Australian coal rail line to shut for 2 weeks: Coronado
Sydney, 25 July (Argus) — The Blackwater rail line in Queensland, Australia will be closed for up to two weeks because of maintenance, which will restrict coal deliveries to the key port of Gladstone. The maintenance program will run from late July to early August, coal mining firm Coronado said on 25 July. This is limiting metallurgical supply from Queensland and pushing up the price of pulverised coal injection (PCI) coal relative to Australian premium low-volatile coal, it added. The two-week shutdown was planned before Coronado released its 16.4mn-17.2mn t saleable coal guidance for 2024 , which it still expects to reach despite a week-long outage on the Blackwater line in June-July following a collision . Shippers appear prepared for the reduction in shipping from the 102mn t/yr Gladstone port over the next couple of weeks, with just 12 ships queued outside the port on 25 July, down from 23 on 6 June and below-average queues of around 20. Coal is delivered to Gladstone through the 100mn t/yr capacity Blackwater rail line and the 30mn t/yr capacity Moura line, both of which are operated by Australian rail firm Aurizon. Gladstone's shipments fell by 9.5pc in June compared with a year earlier, partly because of rail constraints. Around two-thirds of Gladstone's coal shipments are metallurgical coal and a third are thermal. A fire at UK-South African mining firm Anglo American's Grosvenor mine already hit Australian metallurgical coal exports, which led the firm to cut its 2024 production guidance to 14mn-15.5mn t from 15mn-17mn t. The premium for premium hard coal prices over PCI coal prices has shrunk to around $30/t from $145/t over the past six months. Argus last assessed the premium hard low-vol price at $224/t fob Australia on 24 July, with the PCI low-vol price at $193.65/t. Aurizon and Gladstone Port were contacted for comment, but have yet to respond at the time of writing. By Jo Clarke Australian coal price comparisons ($/t) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House passes waterways bill
US House passes waterways bill
Houston, 23 July (Argus) — The US House of Representatives overwhelmingly approved a bill on Monday authorizing the US Army Corps of Engineers (Corps) to tackle a dozen port, inland waterway and other water infrastructure projects. The Republican-led House voted 359-13 to pass the Waterways Resources Development Act (WRDA), which authorizes the Corps to proceed with plans to upgrade the Seagirt Loop Channel near Baltimore Harbor in Maryland. The bill also will enable the Corps to move forward with 160 feasibility studies, including a $314mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. Water project authorization bills typically are passed every two years and generally garner strong bipartisan support because they affect numerous congressional districts. The Senate Environment and Public Works Committee unanimously passed its own version of the bill on 22 May. That bill does not include an adjustment to the cost-sharing structure for lock and dam construction and other rehabilitation projects. The Senate's version is expected to reach the floor before 2 August, before lawmakers break for their August recess. The Senate is not scheduled to reconvene until 9 September. If the Senate does not pass an identical version of the bill, lawmakers will have to meet in a conference committee to work out the differences. WRDA is "our legislative commitment to investing in and protecting our communities from flooding and droughts, restoring our environment and ecosystems and keeping our nation's competitiveness by supporting out ports and harbors", representative Grace Napolitano (D-California) said. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House to vote on waterways bill
US House to vote on waterways bill
Houston, 22 July (Argus) — The US House of Representatives is expected to vote on 22 July on a waterways bill that would authorize new infrastructure projects across ports and rivers. The Water Resources Development Act (WRDA) is renewed typically every two years to authorize projects for the US Army Corps of Engineers (Corps). The bipartisan bill is sponsored by representative Rick Larsen (D-Washington) and committee chairman Sam Graves (R-Missouri). The full committee markup occurred 26 June, where amendments were added, and the bill was passed to the full House . A conference committee will need to be called to resolve the different versions of the bill. The major difference between the bills is that the House bill does not include an adjustment to the cost-sharing structure for the lock and dam construction and other rehabilitation projects. The Senate Committee on Environment Public Works passed its own version of the bill on 22 May, with all members in favor of the bill. The House version of the bill approves modifications to the Seagirt Loop Channel near the Baltimore Harbor in Maryland, along with 11 other projects and 160 feasibility studies. One of these studies is a $314.25mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
South32 misses Australian coking coal output target
South32 misses Australian coking coal output target
Sydney, 22 July (Argus) — Australian-South African diversified resources company South32 was 2pc off its coking coal production target of 4.4mn t at its Australian Illawarra coal operations in the 2023-24 fiscal year to 30 June. The firm is on track to complete the sale of its Illawarra operations in New South Wales (NSW) state by the end of September, marking its exit from coal as it focuses on its non-ferrous metal portfolio. It completed three and started a fourth longwall move at the Appin and Dendrobium mines, leaving new owner Golden Energy and Resources and M Resources with a lower maintenance burden into 2025. South32's total coal production was down by 24pc in 2023-24 compared with the previous year, largely because of maintenance. The firm increased production in the fourth quarter and final half of 2023-24 after a weak first half but the quarter was still down by 15pc on April-June 2023. South32 expects its costs for 2023-24 to be around $150/t, which is in line with its guidance, which was raised from $140/t in February. It received an average price for its Illawarra coal of $275/t for its metallurgical coal and $113/t for its thermal coal for January-June compared with $276/t and $101/t respectively in July-December 2023. The firm's operating margins at its Illawarra metallurgical coal operations were $17/t on thermal coal and $152/t on metallurgical coal in 2022-23 when its operating costs were $127/t. It will release its 2023-24 results on 29 August. Argus last assessed the premium hard coking coal price at $229/t fob Australia on 19 July, down from $334.50/t on 19 January and close to the $235.50/t on 19 July 2023. It assessed the high-grade 6,000 kcal/kg NAR thermal coal price at $134.87/t fob Newcastle on 19 July, up from $128.09/t on 19 January and down from $129.18/t on 19 January 2023. South32 last year dropped plans for a $700mn expansion at Dendrobium, following a dispute with NSW's water agency over its potential impact on water quality . Dendrobium, which supplies coking coal to the Whyalla steelworks in South Australia and exports from NSW's Port Kembla coal terminal, is expected to close in 2028. By Jo Clarke South32 Illawarra Coal output (mn t) Apr-Jun '24 Jan-Mar '24 Apr-Jun '23 2023-24 2022-23 2023-24 guidance Met coal production 1.27 1.24 1.50 4.31 5.50 4.40 Met coal sales 1.36 1.05 1.53 4.17 5.40 Thermal coal production 0.21 0.16 0.25 0.63 1.02 0.60 Thermal coal sales 0.18 0.19 0.17 0.70 0.96 Total production 1.49 1.41 1.75 4.94 6.52 5.50 Source: South32 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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