Australian independent New Hope has joined Chinese-owned coal producer Yancoal and US-Australian producer Coronado in wanting to buy BHP Mitsubishi Alliance's (BMA's) Daunia and Blackwater mines in Queensland.
The BMA assets — which were put up for sale in February — would allow New Hope to increase its exposure to coking coal, diluting its reliance on thermal coal.
But it will face strong competition from other coal mining firms, including Yancoal, Coronado Coal, US energy firms Peabody and Arch Coal, and Australian producer Stanmore.
Strong prices — particularly for thermal coal — over the past year have bolstered the balance sheet of most Australian coal producers, allowing them to pay off debt and build cash reserves for acquisitions. The BMA assets also allow highly thermal coal leveraged firms to move to coking coal, which could have longer term markets in a carbon-constrained world, depending on the development of hydrogen-based steelmaking capabilities.
BMA could choose to sell the mines off separately, extracting the most payment from those with the best options surrounding each mine, or look to sell in a single line. In either case there will be no shortage of bidders, including New Hope, which after years of depressed production is looking to ramp up coal sales to take advantage of what it sees as a supply gap caused by under investment in coal mining.
New Hope reported a net profit of A$667mn ($446mn) for its half year to 31 January, up from A$330mn a year earlier. This allowed it to grow its cash balance to A$971.2mn from A$715.7mn in 31 July 2022, putting it in a good position to make an acquisition despite its pipeline of growth projects.
The firm received an average price of A$467.40/t in August-January, up from A$192.40/t a year earlier. The Argus thermal coal price for high grade 6,000 kcal/kg NAR coal has fallen from around $404.45/t fob Newcastle on 29 December 2022 to $176.28/t on 17 March, which is around the level in late 2021 but above the sub-$100/t prices from late 2018 to mid-2021.
Coking coal prices rallied through the start of 2023, returning to above thermal coal prices, after being in the unusual position of being below the high-grade thermal coal price through the second half of 2022. Argus last assessed the hard mid-vol coking coal price at $296.80/t fob Australia, down from a recent peak of $360.25/t on 16 February but up from $271.25/t on 30 December 2022.
