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Australian coal industry reviews expansion plans

  • : Coal, Coking coal
  • 20/04/22

Australia's coal industry is reviewing plans for expansion and sustaining capital expenditure as they attempt to conserve cash amid fears that coal prices will return to a long period of historical lows below those seen in 2015-16.

Australian coal quarterly production figures for January-March have been largely unaffected by Covid-19 to date, with the disruption to demand lagging supply disruptions and cushioned by existing contracts. But the outlook for both thermal and coking coal prices has mining firms worried, and most are looking at another round of cost cutting and the shelving of non-essential development projects.

Mining majors like BHP and Yancoal are keen to conserve cash. BHP will review its planned $8bn in spending in 2021 and analysts from Swiss Bank UBS forecast the company to slash the budget to around $6.6bn. This is across BHP's portfolio, but its negative outlook for coking coal and repeatedly vocal desire to exit thermal coal has to put these close to the bottom of its spending priorities.

Yancoal, Australia's largest thermal coal exporter, is evaluating contingency budgetary measures and stressed the importance of conserving capital given the uncertain global economic condition. It is focused on cost reductions to ensure that its mines can remain economically viable in the worst of price environments, and spent a lot less time talking up its growth options in its latest quarterly.

Smaller Australian coal players, like Whitehaven and South32, have been more explicit about shelving development plans and curtailing higher cost production in the face of the pandemic. Whitehaven stopped all development projects including the 8mn t/yr Vickery thermal and metallurgical coal project in the Gunnedah basin, until at least 2021.

South32 will move forward with its plans to make a final investment decision on its Eagle Downs coking coal joint venture with BaoSteel by the end of the year but flagged that the current market conditions were a concern for the future of the project. It also cut its sustaining capex and exploration budget across all its commodities by $160mn to protect its financial position.

Prices of high grade thermal coal have fallen to $58.50/t fob Newcastle for 6,000kcal/kg NAR from $67.58/t since the beginning of this month, but remained higher than the low of $49/t in January 2016. Prices of premium hard low-vol coking coal have fallen to $132/t fob Australia from $150/t since the start of April, but remained higher than the low of $75/t in February 2016.

Sustained lower prices from 2013 significantly slowed the growth of Australia's coal exports, culminating in a slight dip in thermal and hard coking coal shipments in 2016. Confidence returned in 2017-18 after sustained stronger prices, with projects restarted and shuttered mines reopened, but the pandemic appears set to reverse this trend.

Australian coal exportsmn t
YearThermal coalHard coking coalSemi soft coking coal
2010141.4100.657.6
2011147.685.044.8
2012171.389.753.3
2013188.3103.563.4
2014200.9118.864.0
2015201.8120.664.2
2016198.4119.767.1
2017200.4110.660.6
2018211.3118.759.9
2019211.9122.159.3

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24/12/06

Republicans weigh two-step plan on energy, taxes

Republicans weigh two-step plan on energy, taxes

Washington, 6 December (Argus) — Republicans in the US Congress are considering trying to pass president-elect Donald Trump's legislative agenda by voting first on a filibuster-proof budget package that revises energy policy, then taking up a separate tax cut bill later in 2025. The two-part strategy, floated by incoming US Senate majority leader John Thune (R-South Dakota), could deliver Trump an early win by putting immigration, border security and energy policy changes into a single budget bill that could pass early next year without Democratic support. Republicans would then have more time to debate a separate — and likely more complex — budget package that would focus on extending a tax package expected to cost more than $4 trillion over 10 years. The legislative strategy is a "possibility" floated among Senate Republicans for achieving Trump's legislative goals on "energy dominance," the border, national security and extending tax cuts, Thune said in an interview with Fox News this week. Thune said he was still having conversations with House Republicans and Trump's team on what strategy to pursue. Republicans plan to use a process called budget reconciliation to advance most of Trump's legislative goals, which would avoid a Democratic filibuster but restrict the scope of policy changes to those that directly affect the budget. But some Republicans worry the potential two-part strategy could fracture the caucus and cause some key policies getting dropped, spurring a debate among Republicans over how to move forward. "We have a menu of options in front of us," US House speaker Mike Johnson (R-Louisiana) said this week in an interview with Fox News. "Leader Thune and I were talking as recently as within the last hour about the priority of how we do it and in what sequence." Republicans have yet to decide what changes they will make to the Inflation Reduction Act, which includes hundreds of billions of dollars of tax credits for wind, solar, electric vehicles, battery manufacturing, carbon capture and clean hydrogen. A group of 18 House Republicans in August said they opposed a "full repeal" of the 2022 law. Republicans next year will start with only a 220-215 majority in the House, which will then drop to 217-215 once two Republicans join the Trump administration and representative Matt Gaetz (R-Florida) resigns. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US House panel approves river infrastructure bill


24/12/06
24/12/06

US House panel approves river infrastructure bill

Houston, 6 December (Argus) — A US House of Representatives committee has approved a bipartisan bill that authorizes improvements to navigation channels by the Army Corps of Engineers (Corps) and maintenance and dredging of river and port infrastructure projects. The House Transportation and Infrastructure Committee advanced the Water Resources Development Act (WRDA) after several months of political wrangling to integrate earlier versions of the legislation approved by the House and Senate . The bill will head to the full House next week, said committee chairman Sam Graves (R-Missouri). This would be the sixth consecutive bipartisan WRDA bill since 2014 if passed by congress. WRDA is a biennial bill that authorizes the Corps to continue working on projects to improve waterways, including port updates, flood protection and supply chain management. WRDA will also "reduce cumbersome red tape", which will allow for quicker project turnarounds, Graves said. The bill authorizes processes to streamline work, he said. The bill also adjusts the primary cost-sharing mechanism for funding for lock and dam construction and major rehabilitation projects. The US Treasury Department's general fund will pay 75pc of costs, up from 65pc, with the rest coming from the Inland Waterways Trust Fund, which is funded by a barge diesel fuel tax. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australian thermal coal exports drop on year in October


24/12/05
24/12/05

Australian thermal coal exports drop on year in October

Sydney, 5 December (Argus) — Australia's thermal coal exports dropped by 4.8pc on the year to 17.1mn t in October, because of subdued South Korean and Indian coal demand. Australian thermal coal exports to South Korea have been relatively low since the start of the year. South Korean energy providers bought 9.8mn t of Australian thermal coal between January-October, 17pc less than they did over the same period last year. On the other side of Asia, Indian thermal coal imports have been dropping in recent months, on the back of growing domestic coal production and declining coal-fired power generation. The country imported 122,196t on Australian thermal coal last month, substantially below the 1.5mn t purchased over the same period last year. Australia's two largest trading partners, China and Japan, accounted for 74.2pc of its October thermal coal exports, more than they have at any point since 2020. The two countries bought 29.3pc of the thermal coal sold by Australian firms in May 2021, and have been steadily increasing their coal market share since. Japanese coal imports from Australia fell by 6.4pc on the month to 5.9mn t in October, and may have continued to fall throughout November, according to recently released shipping records. The Japan Meteorological Agency also in early December forecast a warm winter for the county. The difference between Argus ' Newcastle average NAR 6,000kcal and 5,500kcal fob prices rose to $53/t in October, up by 38pc on the year. The value of 6,000kcal coal has remained relatively stable throughout that period, while the value of 5,500kcal coal has slid downwards. Australian mining firms received an average of $111.10/t for their coal in October 2023, down from $116/t a year earlier. Average Australian export coal prices have consistently lagged 2023 prices since the start of the year, although the gap between the two has narrowed from $137.90/t since January to $4.90/t. By Avinash Govind Australia thermal coal exports Oct '24 Oct '23 Jan - Oct '24 Jan - Oct '23 Total (mn t) 17.1 2.0 169.2 164.8 Value ($bn) 1.9 3.0 19.3 26.3 Average Price ($/t) 111.1 4.0 114.2 163.1 Average FX rate 0.7 0.6 0.7 0.7 ABS Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia’s Dartbrook mine prepares for first coal sale


24/12/02
24/12/02

Australia’s Dartbrook mine prepares for first coal sale

Sydney, 2 December (Argus) — New South Wales mining firm Australian Pacific Coal (APC) is planning to ship its first load of unwashed coal from the underground Dartbrook mine in December 2024, two months after reopening its Hunter Valley facility. APC will focus on producing thermal coal at the mine, and is also planning to test the coking potential of deposits around the site in early 2025. The company recently announced plans to produce 20,000t of coal at Dartbrook by November 2024, ramping up to 2.4mn t/yr by late 2026. APC is planning to increase coal production at Dartbrook during a period of weakening thermal coal demand. Coal exports from the Port Waratah Coal Terminals at the Port of Newcastle fell on the year in November for the second consecutive month. The Australian Office of the Chief Economist announced in September it was forecasting a 21.6pc drop in thermal coal exports between the July 2023 to June 2024 and 2025-26 financial years. Dartbrook sits alongside the Hunter Valley Rail Network, a set of lines connecting dozens of coal mines in New South Wales to the Port of Newcastle. However, APC will not be able to use the lines until it negotiates an access agreement with network operator the Australian Rail Track Corporation. The company must also sign agreements with terminal operators at the Port of Newcastle before it can ship coal out of New South Wales. APC's original Dartbrook resource consent was scheduled to expire in December 2022, but New South Wales' Land and Environment Court granted the company a five-year consent extension in late 2021. The company had been appealing for an extension for two years after an initial unsuccessful attempt. APC is currently working on another application to extend its consent by six years through to December 2033. APC's export preparations come alongside managerial changes at the firm. The company announced the resignation of its chief executive and managing director, Ayten Saridas, the same day it updated investors on Dartbrook. By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia's BOM forecasts severe cyclone season


24/11/27
24/11/27

Australia's BOM forecasts severe cyclone season

Sydney, 27 November (Argus) — Australia's Bureau of Meteorology (BOM) expects the country to experience 11 tropical storms over the next few months, threatening the country's mineral-rich Pilbara region and coal infrastructure in Queensland. The number of storms is in line with historical averages, but BOM warns that rising ocean temperatures could increase their severity. The state weather agency believes that four of these storms will make landfall from late December, and that a La Nina event could start later this year, although it may not last very long. La Nina events are associated with high levels of cyclonic activity. BOM's forecasts suggest that five of the storms are likely to form around Western Australia's mineral-rich Pilbara region, which houses more than 40 operating iron ore mines and two lithium mines. Over the last three months, sea surface temperatures around Pilbara have exceeded historical averages by 1.2–2°C, warming more than in any of the country's other cyclone-prone regions. On the other side of the country, four tropical storms could form around Queensland's cattle and coking coal producing regions, although these are likely to be less severe than the Pilbara storms. Temperatures across most of Queensland are forecast to exceed historical averages by 0.4–1.2°C in October-December. Cyclonic weather in Pilbara could disrupt iron shipping and mining activity in the region. Australia's three largest iron export ports sit along the region's coast. In 2019, Cyclone Veronica forced the closure of Pilbara's three major ports and multiple mines operated by mining company Rio Tinto, prompting the firm to cut its production forecasts for the year. Harsh storms in Queensland have previously damaged vital coal transport links in the state, hampering exports. In 2017, Cyclone Debbie damaged rail lines linking coal mines to the ports of Gladstone, Hay Point, Dalrymple Bay, and Abbott Point, which handle most of the state's coking coal exports. More recently, severe weather also halted deliveries to Mackay port . Queensland and Pilbara are also home to major LNG terminals at Dampier and Gladstone ports that sit within cyclone-prone zones. The two terminals together export over 3mn t/month of LNG . By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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