Heavy rains hit Blackwater coking coal supply line

: Coking coal
20/02/27

Heavy rains have delayed coking coal shipments on the Blackwater rail transport corridor in Queensland this morning, the second time this month that rains have disrupted services on the Blackwater line.

Heavy overnight rains have resulted in localised flooding and forced the Windah-Grantleigh section to close, impacting rail services on the Blackwater rail system, rail operator Aurizon said in a note to its coal supplier customers.

"Repairs are underway, and Aurizon expects train services to resume through the section later this afternoon," the company said.

Disruptions in coal transport logistics are common during the wet season in Queensland, but a lack of spot availability and poor production at several major mines, including UK-South African mining firm Anglo American's Moranbah North, have made buyers uneasy. This is despite overall muted demand for coking coal because of a more bearish outlook on steel prices this year.

The Argus assessment for premium hard low-volatile coking coal delivered on a fob Australia basis has jumped by 17pc to $158.70/t fob since late November, as expectations of a Chinese coal import quota reset and unpredictable weather until April have kept prices supported.

By Rou Urn Lee

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24/12/18

Viewpoint: More US met coal consolidation ahead

London, 18 December (Argus) — Expectations that weak seaborne coking coal prices in the last quarter of 2024 will carry over to 2025 in the face of low steel prices is pointing to further consolidation among US coking coal producers. Consol Energy and Arch Resources set up the most significant merger of 2024 for the US market , with the merged company expected to generate $110mn-140mn of cost savings and "operational synergies" within 6-18 months of the close of the transaction. But continuing cost pressures will likely lead to closures of smaller high-cost mines, not uncommon in the past when US coking coal prices have reached a down cycle. The fob Australia premium low volatile (PLV) coking coal price fell from this summer's high of $260/t in early July to average $203.46/t from the start of October, translating to prices that are below cost for many US producers. In recent years, price volatility and lack of liquidity, particularly in the Atlantic market, has meant many buyers have chosen to buy at index-linked prices, often with fob Australia indexes. The fob US east coast price has averaged $192.84/t for the current quarter, while the high volatile A fob Hampton Road price has averaged $186.47/t in the same period, prices cited by many US producers at near or even below cost after taking into consideration rail and port handling charges. Lower cost longwall miners like Alpha Met Resources reported an average sale cost of $114.27/short ton ($125.96/t) in the third quarter for metallurgical coal, Arch Resources reported $93.81/st for the same and Warrior Met Coal indicated $120.21/st. But others such as Corsa are in clear loss-making territory at $169/st. After freight and handling charges, many of these producers will have fob equivalent costs closer to $170-190/t or even above $200/t for smaller continuous mining operations. The poor margins has also meant US producers like Ramaco have cut back their guidance while lost output capacity has failed to lift prices . Last month, many US producers have already looked to reduce shifts by extending time off for the holidays and hunting season. But this has still failed to stem supplies, particularly in the high volatile coal segment where traders and suppliers that had secured tonnes earlier this year or more recently via term contracts have been offering prices at steep discounts for on-water cargoes to Asia and port stocks in China. US producers have been focusing their efforts on sales to Asia in the face of weak demand in Europe, leading to the absence of much incremental coking coal demand in the region since last year. In a time of high fob Australia prices, margins for US sales to Asia might have been attractive. But with low Australian prices and competition from Russia and Mongolia continuing to grow, the second half of 2024 has seen poor margins for US sales to Asia. While Russian mining costs have risen, they are still well under the levels in the US. Industry sources peg average production cost for open-pit mining in the Kuzbass region at $18.37-35.75/t, excluding value-added tax (VAT), while underground mining stands at $24.83-60.58/t, excluding VAT, according to sources at Russian coal mining companies. Russian coal is also typically discounted to account for sanctions and difficulties with payments, and more recently the export duty on Russian coking coal was removed. US president-elect Donald Trump's threat to impose import tariffs on all imports from China has drawn concern in the market about China imposing retaliatory tariffs on US coal. In a well-supplied market and the presence of strong competing producing countries at key import destinations, many US producers expect they will have to absorb any increase in tariff to secure sales to China. At a recent industry conference in Prague, several participants indicated the fob Australia PLV index should be in the region of $220-225/t to be sustainable for the wider industry. By Siew Hua Seah Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Workers strike at Australia's Gladstone port

24/12/17

Workers strike at Australia's Gladstone port

Sydney, 17 December (Argus) — Union members are engaging in a day-long work stoppage at Queensland's Port of Gladstone today, as port strikes spread across Australia. Gladstone Ports is "experiencing impact to some Port operations due to union-led protected industrial action," a company spokesperson confirmed to Argus . "GPC has been engaged in contingency planning and is liaising with customers to minimise operational impacts while prioritising safety," the representative said. Five unions, representing hundreds of GPC workers, voted to authorise a range of strike actions, including unlimited work stoppages, last week. The current day-long stoppage does not involve all five of those unions, although the non-participating unions may engage in industrial actions over the coming days. The port of Gladstone is a major coal and LNG hub. Queensland exporters shipped 63.7mn t of coal and 23mn t of LNG out of the port in 2023, supporting the state's resource sectors. The Gladstone stoppage comes alongside day-long work stoppages at operator Qube's ports across Australia that began on 16 December. Maritime Union of Australia (MUA) workers last week decided that they would launch 24-hour stoppages at the ports of Kembla, Brisbane, and Darwin, on 16 December. These ports tend to handle grains, livestock, petroleum, and coal shipments. Qube is also expecting the MUA to shortly launch industrial actions at the ports of Dampier, Freemantle, Port Hedland, Bunbury, Geraldton, and Whyalla. The company's Port Hedland and Dampier facilities play a major role in supporting Western Australia's mineral sector, handling iron mined by most of the state's major miners. Union and GPC negotiators have been locked in discussions over the GPC Enterprise Agreement for months, unable to agree on wage and rostering proposals. Qube and the MUA similarly disagree over wage and employment condition proposals. By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US rail group optimistic about 2025 rail demand

24/12/12

US rail group optimistic about 2025 rail demand

Washington, 12 December (Argus) — US rail volume is likely to start strong in 2025, but railroads will need to navigate changing federal policies, the Association of American Railroads (AAR) said. Volume next year hinges on a few key factors, including the resilience of consumer spending, strength in the labor market, and the trajectory of inflation and interest rates, the group said. Railroads will need to remain vigilant as these economic indicators will be critical in helping assess rail traffic and broader economic health in the months ahead, AAR said. "Strong intermodal growth and stable consumer demand offers reasons for optimism," AAR said. "But railroads and the economy alike must navigate evolving policies and potential disruptions" as the US enters 2025 under a new administration, the group said. The AAR'S optimism comes as rail traffic in November "while by no means stellar, suggests that the broader economy remains on stable footing", AAR said. US intermodal rail volume set new records in November. The increase reflected strong consumer demand following job gains that pushed increased spending, AAR said. Intermodal traffic is made up primarily of consumer goods shipped in containers between different modes of transportation, although some scrap metal and specialty agriculture products ship this way. US railroads loaded an average of 282,000 intermodal containers and trailers per week, up by 11pc from a year earlier. That was the highest weekly average for any November since AAR began tracking intermodal data in 1989. Carload traffic fell by 3.8pc compared with November 2023. Carload traffic is primarily made up of commodities. Coal was the "biggest problem", AAR said. US railroads loaded 15pc less coal last month compared with a year earlier, while year-to-date loadings were down by 14pc from the same 11 months in 2023. If coal were excluded, monthly US carload traffic in November would have notched a 10th consecutive year-on-year increase. Industrial products volume was down by 1pc from a year earlier. Manufacturing is a major driver of US carload traffic, and that sector remains sluggish, AAR said. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia's BOM forecasts severe cyclone season

24/11/27

Australia's BOM forecasts severe cyclone season

Sydney, 27 November (Argus) — Australia's Bureau of Meteorology (BOM) expects the country to experience 11 tropical storms over the next few months, threatening the country's mineral-rich Pilbara region and coal infrastructure in Queensland. The number of storms is in line with historical averages, but BOM warns that rising ocean temperatures could increase their severity. The state weather agency believes that four of these storms will make landfall from late December, and that a La Nina event could start later this year, although it may not last very long. La Nina events are associated with high levels of cyclonic activity. BOM's forecasts suggest that five of the storms are likely to form around Western Australia's mineral-rich Pilbara region, which houses more than 40 operating iron ore mines and two lithium mines. Over the last three months, sea surface temperatures around Pilbara have exceeded historical averages by 1.2–2°C, warming more than in any of the country's other cyclone-prone regions. On the other side of the country, four tropical storms could form around Queensland's cattle and coking coal producing regions, although these are likely to be less severe than the Pilbara storms. Temperatures across most of Queensland are forecast to exceed historical averages by 0.4–1.2°C in October-December. Cyclonic weather in Pilbara could disrupt iron shipping and mining activity in the region. Australia's three largest iron export ports sit along the region's coast. In 2019, Cyclone Veronica forced the closure of Pilbara's three major ports and multiple mines operated by mining company Rio Tinto, prompting the firm to cut its production forecasts for the year. Harsh storms in Queensland have previously damaged vital coal transport links in the state, hampering exports. In 2017, Cyclone Debbie damaged rail lines linking coal mines to the ports of Gladstone, Hay Point, Dalrymple Bay, and Abbott Point, which handle most of the state's coking coal exports. More recently, severe weather also halted deliveries to Mackay port . Queensland and Pilbara are also home to major LNG terminals at Dampier and Gladstone ports that sit within cyclone-prone zones. The two terminals together export over 3mn t/month of LNG . By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US’ Peabody to buy Anglo’s Australian met coal assets

24/11/25

US’ Peabody to buy Anglo’s Australian met coal assets

Singapore, 25 November (Argus) — US coal producer Peabody Energy has agreed to acquire the bulk of coking coal assets that UK-South African mining firm Anglo American is seeking to divest as it exits the coal sector. Peabody plans to buy Anglo's majority stakes, at up to $3.8bn, in four metallurgical coal mines — Moranbah North, Grosvenor, Aquila and Capcoal — located in Australia's Bowen Basin, with the transaction expected to close by mid-2025 and subject to customary closing conditions, the producer said in a statement. With the acquisition of coal mines, Peabody's combined US-Australia production will rise from 10.6mn short tons/yr at present, to an estimate of 11.3mn st/yr (10.25mn t) by 2026, according to Peabody, strengthening the producer's position in the premium hard coking coal (PHCC) market. Moranbah North, Grosvenor and Aquila are PHCC mines, while Capcoal produces a combination of PHCC, pulverised coal injection (PCI) and other coal grades. At present, Australian low volatile hard coking coal, or tier-2 coking coal, accounts for 55pc of Peabody's 7.4mn st in coking coal sales, but the acquisition of new assets will bring PHCC's share up to 51pc and reduce its tier 2 coal to 24pc. Peabody also produces high volatile A coal in the US, accounting for 12pc of sales this year. In addition to the sale of assets to Peabody, Anglo has agreed to sell the Dawson mine in Central Queensland to Indonesian mining company PT Bukit Makmur Mandiri Utama (BUMA) for $455mn. Earlier this month, Anglo agreed the sale of its 33pc share of the Jellinbah Group coking coal joint venture to partner Australia-based Zashvin at $A1.6bn ($1.04bn). In May, Anglo announced plans to exit its coal, platinum, nickel and diamond businesses shortly after rejecting repeated takeover bids from Australian resources firm BHP. These deals come against a backdrop of a challenging price environment for steel making and subsequent weakness in coking coal prices, implying tight margins for coal producers. After reaching a high of $336.50/t fob Australia, the premium low volatile coking coal fell steadily throughout this year to reach $176.50/t in September, before recovering to remain in the $201-208/t range for most of November. In addition to a less than friendly investment climate for coal projects, Australia's Queensland state and New South Wales (NSW) state governments increased royalties on coal sales in 2023 and 2024 respectively, putting further strain on Australian miners already facing inflationary pressure from wages, equipment and fuel costs. Lower coking coal prices this year have translated to reduced royalty payments, but have yet to stem the tide of consolidations and asset sales as mining companies exit the sector. In August, Australia-based diversified metals producer South32 completed the sale of its Illawarra coking coal operations in NSW to an entity owned by Singapore-based Golden Energy and Resources (Gear) and Australia's M Resources for $1.65bn. In the US, rising mining costs and weak seaborne prices for most of this year led to the closure of smaller high-cost operations and mergers such as that of Arch Resources and Consol Energy to form Core Natural Resources , expected to close by the first quarter of 2025. In July, trading firm Glencore completed its acquisition of a majority stake in Elk Valley Resources, the coking coal division of Canadian mining firm Teck Resources, growing the former's thermal and coking coal production to 130mn t/yr. By Siew Hua Seah Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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