Anglo American cuts coking coal guidance

UK-South African mining firm Anglo American expects depressed coking coal output to continue next year and has also cut its production guidance for 2022, after it delayed its plans to expand the Moranbah-Grosvenor processing plant in Queensland, Australia by 4mn t/yr.

The firm has narrowed its guidance for 2020 to 17mn t from 16mn-18mn t, which would be down by 26pc on the 23mn t produced in 2019. It expects output to recover only slightly to 18mn-20mn t in 2020, implying that it expects a slow increase at its 5mn t/yr Grosvenor mine, which is due to reopen in June.

The mine was closed in early May following a methane gas explosion that seriously injured five workers, forcing the firm to cut its guidance from 19mn-21mn t. It had already cut its coking coal production guidance for 2020 in February from 21mn-23mn t after a roof collapse at its 6.5mn t/yr Moranbah North in Queensland mine in January.

The accident at Grosvenor and uncertainty about reopening dates, combined with China's ban on imports of Australian coking coal, have prompted Anglo American to push back its plans to upgrade the processing plant at the Moranbah-Grosvenor complex to 20mn t/yr capacity from 16mn t/yr. This stage one project was designed to maximise throughput as Grosvenor increased to full capacity of 7.5mn t/yr and productivity measures continued to lift output at Moranbah North.

Anglo American has pushed back a final investment decision on this project until 2022, with first production now not expected until 2024 at the earliest. This has led the firm to cut its guidance for 2022 to 22mn-24mn t from 25mn-27mn t and to issue guidance of 23mn-25mn t for 2023 compared with a previous long-term target of 30mn t/yr.

The firm had also been looking at developing the 14mn t/yr Moranbah South underground coking coal mine, which sits to the south of Grosvenor and has been approved for development by the Australian federal government. But this higher cost project was not on Anglo American's list of expansion options that it showed investors in a briefing last week.

Argus last assessed the premium hard low-volatile coking coal price at $101.90/t fob Australia on 11 December, down from a recent high of $136/t in early October before China's informal ban on Australian coal imports. The price is well below the $200/t in June 2018 when Anglo American was pushing forward with the Moranbah-Grosvenor expansion.

By Jo Clarke