Coronado sees upside from China coal bans while South 32 kills off Eagle Downs
Coal producers who don’t sell to China have still been heavily hit by its coal bans, with prices in Australia falling by 27 per cent in December as the impact flowed through.
Steel mills could restart because of lower Australian prices for coal.
But the impact has not been one way. Coronado chief executive Gerry Spindler said China was now paying above $US200 a tonne for its coal, double the $US102 a tonne received by Australians for hard coking coal on the open market, because of the bans it imposed.
“The divergence between (free-on-board) Australia and (cost-and-freight) China benchmark coking coal price was driven by import restrictions on Australian metallurgical coal.
“Although our Australian operations do not regularly supply customers in China we are nevertheless impacted by the fall in benchmark pricing.
“To supplement Australian imports, Chinese steel mills continue to source metallurgical coal in alternative markets such as North America and Russia.”
Diversified miner, South32 also formally killed off plans to develop the Eagle Downs coal mine in central Queensland.
It said the project would be placed on hold “while we assess options for our joint venture interest”.
The company said its feasibility study indicated a potential for a long-life mine but the expected returns were too low.
Coronado also revealed that while its Australian mine was impacted by the lower prices it was benefitting from its American operations.
The bans may also lead to steel producers restarting operations, offsetting the impact of the China strategy. Demand for steel in India was at pre-pandemic levels.
Steel demand in China continues to remain buoyant, underpinned by construction demand but Coronado said production from its Curragh mine fell 14 per cent to 3.7 million tonnes for the December quarter.
It’s realised price for the quarter from Curragh was $US85 a tonne, a fall of 1.6 per cent.
December quarter revenue was $US372 million
