Coronado cuts Australian coal output target, ups costs

Spanish Market: Coal, Coking coal
31/10/22

US-Australian coal producer Coronado Coal has increased its 2022 cost guidance again and cut its production forecast because of continued inflation and heavy rain across the east coast of Australia.

Coronado expects to produce 16.9mn-17.1mn t of coal in 2022, down from its previous range of 18mn-19mn t, leaving it with a target of at least 5.3mn t for October-December after it produced 4.1mn t of saleable coal in July-September. The ramp up in production this quarter could be challenging given the Australian Bureau of Meteorology's forecast for a wetter than average end to the year in Queensland because of the ongoing La Nina weather pattern.

The firm increased its cost guidance to $81-83/t for 2022 from the $79-81/t that it released in July, which was also revised up from the $69-71/t released in February. Coronado cited lower volumes and widespread inflation as driving up costs.

High coking and thermal coal prices have underpinned strong earnings, allowing Coronado to pay $225mn in a special dividend to its shareholders on 31 October.

"Met coal prices have recently improved, supported by supply concerns from Australia and Canada, and high thermal coal prices continuing to support met coal crossover tonnes into the thermal coal market," chief executive Gerry Spindler said. "Coronado remains well positioned to take advantage of the current price arbitrage to maximise price realisations," he added.

The firm expects to sell 410,000t of thermal coal in October-December from its Australian operations. Coronado increased the proportion of thermal coal it sold in January-September to 22pc from 18pc in the same period of 2021. The company joined other coal mining firms in prioritising high priced thermal coal, while maintaining relationships with its long-term metallurgical coal customers.

In the US, Coronado has locked in a sales price of approximately $201/t for 2023 on a for basis, up by $14/t from 2022, for most of its annual fixed price sales of met and thermal coal. These sales account for 40pc of the expected US production and cover 90pc of the anticipated cash costs and royalties.

Coronado is in discussions with US energy firm Peabody about a possible merger.

Argus last assessed the hard mid-vol coking coal price at $287/t fob Australia on 28 October, up from $166/t on 1 August but down from a peak of $623.65/t on 15 March. It assessed the high-grade 6,000 kcal/kg NAR thermal coal at $376.22/t fob Newcastle on 28 October, down from a peak of $444.59/t on 9 September.

By Jo Clarke

Coronado coal results
	Jul-Sep '22	Apr-Jun '22	Jul-Sep '21	Apr-Jun '21	Jan-Sep '22

Sales volumes (mn t)
Australia (Curragh)	2.4	2.3	2.8	7.5	8.5
US	1.7	1.6	1.8	4.9	4.9
Total	4.1	3.9	4.6	12.4	13.5
% coking coal of total sales	79.5	78.9	81.2	78.4	82.2
Realised prices ($/t)
Australian realised met coal price (FOB)	313	357.40	154.90	323.90	117
US realised met coal price (FOR)	191.60	286.20	131.60	232.40	111.50
Source: Coronado

Australian coal price comparisons $/t

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