Bowen Coking Coal (BCC) has become the second Australian coal mining firm this month to seek capital to enable it to continue operating, as weak coal prices have cut cash flow across the industry.
BCC has not revealed the amount of money it is looking to raise, but warned today that it may need to temporarily pause or cut production at its 5.5mn t/yr Burton mine complex if it does not secure additional cash.
The company is looking into debt, equity and hybrid funding arrangements, but it is not certain that it will be able to secure enough funding to continue operations as usual.
BCC's cash flow problems stem from persistent price weakness in the coking and thermal coal markets. Coking coal accounted for 55pc of the company's total sales over July 2024–March 2025 — the first three quarters of the financial year.
Argus' 5,500kcal thermal coal price has fallen over the 2024-25 financial year (July-June), from $86.92/t fob Newcastle on 1 July to $66.62/t fob Newcastle on 19 June. Its metallurgical coal premium hard low-volatile fob Australia price declined from $237/t to $175.75/t over the same period.
BCC is also facing financial challenges unrelated to prices. Queensland's coal royalty rates — which progressively increase based on commodity prices — are unsustainable and this is putting extreme pressures on producers, the company said.
BCC's capital-raising campaign comes just weeks after US-Australian producer Coronado inked a $150mn financing deal with Australian state-owned electricity generator Stanwell, to ease its cash availability challenges.
US credit ratings agency Fitch downgraded Coronado's credit rating from B to CCC+ on 14 May, citing volatile premium hard coking coal prices. It does not rate BCC's credit worthiness.
Coal firms that rely on longer-term supply contracts and offtake deals are better positioned to manage coal price fluctuations than producers reliant on spot markets. Long-term coal supply deals and offtake agreements often include price floors that protect producers from price swings, easing cyclical pressures.
Australian producers of higher-calorific value (CV) coal — around 6,000kcal — are likely facing some pricing difficulties, but have more breathing space than BCC.
Australian producer Whitehaven Coal and Chinese-Australian producer Yancoal will probably only start losing money on high-CV operations when prices drop to around $80/t, based on their costs and operating margins. Argus' 6,000kcal thermal coal price was last assessed at $102.08/t fob Newcastle.
