BMA's Australian coal at low end of output target

  • : Coking coal
  • 24/02/20

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.

Australian metallurgical coal prices ($/t)

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24/05/20

India's JSW Steel to buy coking coal firm in Mozambique

India's JSW Steel to buy coking coal firm in Mozambique

Singapore, 20 May (Argus) — India's JSW Steel will buy a coking coal company in Mozambique to secure supply of the key steelmaking raw material and shield against any volatility in prices. JSW Steel's board of directors approved the acquisition of coal mining firm Minas de Revuboe (MDR) for about $74mn. The purchase of a 92pc stake in MDR gives JSW access to more than 800mn t of premium hard coking coal reserves in Mozambique, the steel producer said on 17 May. MDR's mine is not yet operational but the company aims to start developing the mine in the 2024-25 fiscal year. "This is not only going to provide us some cushioning with respect to the highly volatile [premium low-volatile (PLV)] index," said JSW Steel's chief executive officer Jayant Acharya. "It also is logistically closer to India, and therefore, will give us an optimised cost." Fluctuations in prices of high-quality seaborne coking coal have been a concern for Indian steelmakers, as they work to ramp up production in anticipation of rising demand from the infrastructure and automobile sectors. The Argus -assessed Australian PLV hard coking coal price crossed $600/t in March 2022, following the start of the Russia-Ukraine conflict. It was at $237/t on 17 May, a decline of $8/t from the start of this month, owing to ample supplies and thin buying interest. JSW Steel's fourth-quarter profit fell by 64pc to 12.99bn rupees ($156mn) because of higher coking coal costs. Crude steel production in the quarter rose by 3pc on the year to 6.79mn t, while sales totalled 6.73mn t, also registering a growth of 3pc from last year. The company also expects capital expenditure at 200bn rupees ($2.4bln) in the 2024-25 fiscal year, as it adds to its steelmaking capacity. JSW Steel is targeting a production capacity of 50mn t/yr by the 2030-31 fiscal year. The company expects steel demand to pick up in the coming year, citing the government's infrastructure push and robust economic growth in India. By Amruta Khandekar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Anglo American to exit from coal, Ni, platinum: Update


24/05/14
24/05/14

Anglo American to exit from coal, Ni, platinum: Update

Adds details of Anglo American's latest plan to demerge or sell its assets Singapore, 14 May (Argus) — UK-South African mining firm Anglo American has announced plans to exit its coal, platinum, nickel and diamond businesses, shortly after rejecting Australian resources firm BHP's latest takeover bid. Anglo American wants to sell its coking coal business in Australia, which includes the 6.5mn t/yr Moranbah and 5mn t/yr Grosvenor mines in Queensland. The firm also plans to demerge Anglo American Platinum, as well as sell or demerge its De Beers diamond business, it said on 14 May. Anglo American will also slow investment in its Woodsmith polyhalite fertilizer project in the UK, where it was previously targeting first commercial output in 2027 . It is also exploring options for care and maintenance as well as divestment of its nickel assets in Brazil. The move to "accelerate the delivery of consistently stronger shareholder returns" with the latest plan comes on the back of a takeover bid by BHP. Anglo American turned down a revised £34bn ($42.7bn) takeover proposal from BHP on 13 May because it "continues to significantly undervalue Anglo American and its future prospects". It earlier rejected BHP's £31bn all-share offer for the same reason. "The latest proposal from BHP again fails to recognise the value inherent in Anglo American," Anglo American chairman Stuart Chambers said on 13 May. Anglo American shareholders are well positioned to benefit from increasing demand from "future-enabling products", Chambers added. Copper was the second-highest contributor to Anglo American's earnings last year, accounting for 32pc of its earnings before interest, taxes, depreciation and amortisation, after iron ore. BHP's latest offer represents a total value of around £27.53 per Anglo American ordinary share, including £4.86 in Anglo Platinum shares and £3.40 in Kumba shares, BHP said on 13 May. The takeover proposal came with a requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore — its assets in South Africa — to Anglo American shareholders. "This leaves Anglo American, its shareholders and stakeholders disproportionately at risk from the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover," Anglo American said. By Reena Nathan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Anglo American rejects BHP’s revised takeover proposal


24/05/14
24/05/14

Anglo American rejects BHP’s revised takeover proposal

Singapore, 14 May (Argus) — UK-South African mining firm Anglo American has rejected a revised £34bn ($42.7bn) takeover proposal from Australian resources firm BHP because it "continues to significantly undervalue Anglo American and its future prospects". Anglo American earlier rejected BHP's £31bn all-share offer for the same reason. "The latest proposal from BHP again fails to recognise the value inherent in Anglo American," Anglo American chairman Stuart Chambers said on 13 May. Anglo American shareholders are well positioned to benefit from increasing demand from "future-enabling products", Chambers added. Copper was the second-highest contributor to Anglo American last year, accounting for 32pc of its earnings before interest, taxes, depreciation and amortisation. BHP's latest offer represents a total value of around £27.53 per Anglo American ordinary share, including £4.86 in Anglo Platinum shares and £3.40 in Kumba shares, BHP said on 13 May. The takeover proposal came with a requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore — its assets in South Africa — to Anglo American shareholders. "This leaves Anglo American, its shareholders and stakeholders disproportionately at risk from the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover," Anglo American said. By Reena Nathan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US met coal suppliers expect belated supply tensions


24/05/03
24/05/03

US met coal suppliers expect belated supply tensions

London, 3 May (Argus) — US coking coal prices have so far brushed off any impact of the collapse of the Francis Scott Key bridge in Baltimore on 26 March and the subsequent disruption of vessel traffic via the Port of Baltimore. Suppliers such as Arch Resources and Blackhawk that utilise the Baltimore shipping route have sought effective alternative arrangements so far and buyers have been largely comfortable despite some delays in laycans. Other suppliers such as Northern Appalachia's largest producer, Consol Energy's Bailey mine , which is a key supplier to Atlantic end-users, have faced more challenges, market participants suggest. The decline in fob Australia coal prices from last year's highs amid improved supply availability has also weighed on prices. The Argus assessed premium low-volatile coking coal fob Australia price was at $242.80/t on 3 May, largely unchanged from $254/t on 26 March after reaching a low of $224/t on 8 April. The US east coast prices have followed a similar trajectory, with low-volatile fob US east coast at $215/t today down from $220/t on 26 March after falling to a low in April. Low European demand has been one of the reasons behind the tepid response to coking coal shipment delays from the US. But with expectations of at least some recovery in the second half of 2024 and still no firm date on when the Baltimore traffic will return to normal, some US suppliers suggest coking coal prices may face some upward pressure later this year. Luxembourg-based steelmaker ArcelorMittal has kept its apparent steel demand outlook in Europe unchanged for 2024, expecting a growth of 2-4pc on the year . European steel association Eurofer downgraded its apparent steel consumption outlook for 2024 again , to 3.2pc from a previous forecast of 5.6pc, owing to worsening geopolitical tensions, economic uncertainty, energy prices, inflation and higher interest rates. But this would still be an improvement from a 9pc fall in steel consumption in 2023. There is also optimism among US coal suppliers that Brazil may be a source of renewed demand in the coming months with domestic steel production expected to improve. The Brazilian government is due to increase taxes for some imported steel products after facing pressure from the domestic steel industry to apply tariffs on imports, in particular on Chinese steel. Taxes will be increased to 25pc on 11 steel products — mainly flat rolled — contingent on such import levels exceeding prescribed quotas, the trade ministry's committee on foreign commerce, Gecex/Camex, said. Brazil's crude steel output reached 31.9mn t in 2023, down by 6.5pc on the year, World Steel Association data show. In the US, the fall in seaborne met coal prices also points to potential consolidation in the sector and the possibility of supplies tightening down the road. Industry participants highlight that some of the small and mid-sized mining operations that have emerged in the past two years amid a strong price environment are struggling. Bens Creek Group, which operates the Bens Creek Mining project in West Virigina with around 30,000-35,000st (27,200-31,800t) per month of coking coal output, filed for Chapter 11 bankruptcy in April. The year-to-date average price of high-volatile A for 2024 stands at $242.62/t fob Hampton Roads and is estimated to be above production costs for some of these mines. In 2022, high-volatile A prices averaged $347.81/t fob Hampton Roads, driven by a combination of market concerns over the Russia-Ukraine conflict and supply disruptions in Australia. While Russian coking coal remains available and competitively priced in the market, in particular a key supply source for China, US sanctions will continue to put pressure on major coal importers such as India and South Korea to reduce their Russian imports. The US announced fresh sanctions against Russian coal producer Sibanthracite's group of companies earlier this week. By Siew Hua Seah Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Peabody maintains outlook despite weaker 1Q


24/05/02
24/05/02

Peabody maintains outlook despite weaker 1Q

New York, 2 May (Argus) — US coal producer Peabody Energy still expects to produce and sell thermal coal at or slightly below 2023 levels this year despite missing its internal sales target last quarter. The company today maintained its outlook of shipping 80mn-87mn short tons (72.6mn-78.9mn metric tonnes) of Powder River basin (PRB) coal this year and 14.5mn-15.5mn st of other US thermal coal. Peabody shipped 87.2mn st of PRB coal last year and 16.2mn st of other US thermal coal. Peabody's first quarter 2024 PRB volumes dropped to 18.7mn st — the lowest in almost four years — from 22mn st in January-March 2023 because of a warmer-than-normal winter and low natural gas prices . But the company is expecting better market conditions over the coming months. "We have already seen an uptick in some nominations for May," Peabody's chief executive officer Jim Grech said. "It looks like there is recovery starting to occur in the PRB." Grech said that the recent nominations were a little stronger than what company executives had been expecting, and Peabody is getting some early indications that the trend may continue into June. He also said that over 20 power plants have announced delays and retirement dates, given projected load growth in the US thermal market, which could support medium- to longer-term coal demand. The company has 85mn st of PRB coal under contract and priced to ship this year at an average $13.70/st. It has also 15.2mn st of other US thermal coal under contract at an average price of $54.20/st. This quarter, PRB shipments should be around 15.5mn st and have an average price of $13.80/st and other US thermal coal sales should be 3.8mn st at an average price of $54.80/st, compared with 18.9mn st and 3.8mn st in the same period of last year. The company shipped 3.2mn st of other thermal coal last quarter, down from 4.5mn st a year earlier. But it recently signed new contracts to ship 1.8mn st of this type of coal, which will support sales this quarter and in the back half of 2024. Peabody also is working with the National Mining Association and America's Power to prepare lawsuits against the Environmental Protection Agency (EPA) over the agency's newly finalized suite of emissions, effluent and coal ash rules. The agency has "overstepped" its authority and threatens grid reliability at a time of increased energy demand, the producer said. But Grech said that the new rules finalized by EPA last week are not expected to have any near-term impact on US generation mix, and opposition to EPA's new rules "puts in doubt" the impact that these rules may have in the longer-term. First quarter sales at the company's other coal business segments came in as expected. Peabody's metallurgical coal shipments inched up to 1.4mn st from 1.3mn st a year earlier, and its Australian thermal coal shipments increased to 4mn st in the first quarter of 2024 from 3.6mn st a year prior. By Elena Vasilyeva Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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