US-Australian mining firm Coronado Coal has deferred an expansion of its Curragh mine in Queensland and increased coking coal supplies to China, as Covid-19 lockdowns cut demand in its key markets of India, Japan, South Korea and Europe.
Coronado, which shut its US coal mines at the end of March and withdrew its production guidance of 19.7mn-20.2mn t for 2020, warned that lower coking coal prices are likely to persist throughout this year, with further downside risks. This depressed outlook comes despite many metallurgical coal producers already reducing or suspending production because of the pandemic, the firm said today.
Coronado is working with its major customers in India, Japan, South Korea and Europe to secure demand for its Curragh coking coal as a base load for coke blends. It has also moved more coal into China, where steelmaking is currently less affected by lockdowns. Demand for metallurgical coal has slumped in the past two months as steelmakers curtail or stop production in response to lockdown measures in their regions. At the same time, some mines that were shut because of the pandemic have begun to reopen, putting downward pressure on prices that may force more marginal coal producers to cut output.
Coronado sold 4.5mn t of coal in January-March, down from 4.7mn t in October-December and 5mn t in the first quarter of last year. Shipments are likely to slip to around 3mn t in April-June, with 1.9mn t coming from its now-closed US operations in the latest quarter. The firm still has 750,000t of stockpiles at its US operations that it could sell if demand allows.
The 12.6mn t/yr capacity Curragh mine produced just 2.6mn t in January-March, after it was disrupted for several weeks following a fatality in January. Coronado had planned to expand the mine to 15mn t/yr by 2023 at an estimated cost of $80mn-100mn, but has shelved this plan to conserve cash during the pandemic.
Coronado operates four mines — the Curragh coking coal mine in the Bowen basin region of Queensland, Australia, and three US coal mines in Virginia and West Virginia. It produced 20.2mn t of coal in 2019, short of its revised target of 21.1mn-21.6mn t and in line with its 2018 production.
Coronado received an average price of $120/t fob Australia for its Curragh coal during January-March, which was in line with October-December but down from $153.40/t in January-March 2019. Argus last assessed the Australian premium hard coking coal price at $117.50/t fob Australia on 27 April, down from $147.65/t on 1 April.
Coronado's unaudited cost per tonne sold for the group was $56.80/t in January-March, up from an average of $51.80/t in 2019, which was towards the top end of its market guidance of $51-52/t for 2019.
| Coronado coal sales | mn t | ||
| Sales volumes | January-March 2019 | Oct-Dec 2019 | January-March 2020 |
| Australia (Curragh) | 3.1 | 3.3 | 2.6 |
| US | 2.0 | 1.4 | 1.9 |
| Total | 5.1 | 4.7 | 4.5 |
| % coking coal of total sales* | 79.6% | 76.3% | 81.1% |
| Source: Coronado | |||
| *remaining coal is thermal coal | |||
