Australian delays affect Anglo American coking coal

UK-South African mining firm Anglo American's delay in securing regulatory approval to restart its 5mn t/yr Grosvenor mine and a below expected performance at its 6.5mn t/yr Moranbah mine are adding to wide price premiums for Australian hard coking coal.

Anglo American produced 14.9mn t of metallurgical coal in 2021, just shy of its 15mn t target, by increasing production at its lower grade Dawson mine, offsetting lower production at the high-grade Moranbah and the delayed restart of Grosvenor. This is contributing to the shortage of high-grade hard coking coal exports from Australia and the wide premiums paid compared with lower grade metallurgical coal such as pulverised coal injection (PCI) and semi-soft coking coal.

The firm had expected to begin longwall operations at Grosvenor late last year but has not been granted regulatory approval after the mine was closed following a gas ignition in May 2020 . The firm's Moranbah mine, which was restarted in June after being closed for four months because of elevated gas levels , has also not raised output as expected with difficult geological conditions.

This has left Anglo American reliant on its lower grade Dawson mine to come close to its 15mn t guidance for 2021, with its 20mn-22mn guidance for 2022 reliant on the government approving the restart of Grosvenor quickly and on workforce absenteeism staying under control as Queensland experiences its first major wave of Covid-19 infections.

The 2022 guidance is also dependent on the ramp-up of the 3.5mn t/yr Aquila mine, designed to replace the Grasstree mine. Aquila was scheduled to start in early 2022 but there has been no update on the project to date.

Anglo American produced 4.37mn t of metallurgical coal during October-December, up from 4.29mn t for July-September and from 4.18mn t in October-December 2020. But its proportion of hard coking coal slipped to 67pc from 77pc a year earlier, with the remainder PCI and semi-soft coking coal.

Premium hard coking coal prices more than trebled from early May to exceed $400/t fob Australia in mid-September before easing until late November and then rising again to set new record highs in January. Argus last assessed the premium hard low-volatile coking coal price at $445.85/t fob Australia on 7 February, up from $381.65/t on 12 January. The non-premium hard coking coal prices has largely tracked the premium price, while the PCI and semi-soft prices have lagged behind.

Argus last assessed the PCI and semi-soft coking coal prices at $291.80/t and $273.35/t respectively fob Australia on 7 February. The premium hard coking coal price is currently at a premium of $172.50/t to the semi-soft price compared with $63.35/t a year earlier.

By Jo Clarke

Anglo American metallurgical coal production (mn t) Oct-Dec &#39;21 Jul-Sep &#39;21 Oct-Dec &#39;20 2021 2020 Moranbah 1.08 1.31 1.21 3.05 4.43 Grosvenor 0.05 0.02 0.00 0.07 1.11 Capcoal (Grasstrees) 1.59 1.50 1.68 5.99 5.61 Dawson 0.65 0.66 0.46 2.48 2.43 Jellinbah 0.80 0.79 0.83 3.12 3.24 Total 4.37 4.29 4.18 14.91 16.82 Source: Anglo American

Metallurgical coal prices ($/t)

Related News