Coronado Resources foresees coking coal price rise

Coal producer Coronado Global Resources believes it has passed the most severe period of weak coking coal prices. The company expects metallurgical coal demand and prices will increase, Kallanish notes.

The producer acknowledges the Australia-China trade dispute caused international metallurgical coal prices to fall sharply. However, as demand resumes in other markets, such as India, Pakistan and the Middle East, the price of Australian coal will rise, it adds. Countries such as Mongolia, Russia, and Indonesia will focus more on supplying China, which leaves other markets for Australia, it adds.

In 2020, Coronado produced 17 million tonnes of coal and sold about 18.2mt, down on 20.2mt and 19.9mt respectively in 2019. This is due to lower production stemming from the temporary suspension of mining activities at the Curragh mine and the idling of US operations in April and May 2020. Metallurgical coal and thermal coal represented approximately 79.9% and 20.1% respectively of sales volumes.

The company’s 2020 revenue was $1.462 billion, down 34% on-year as a result of lower sales volumes and a reduction in the average realised metallurgical coal price. Coronado’s realised metallurgical coal pricing reached $90.5/tonne, down 29.7%, as a result of soft market conditions.

The mining cost per tonne sold reached $55.6/t, 7.3% higher than 2019 as a result of lower production volumes. It expects to see mining cost per tonne sold increase again in 2021 to $57-59/t.

Coronado expects demand for seaborne metallurgical coal will be underpinned by the growth of India’s blast furnace production over the next decade. Metallurgical coal supply will increase from 300mt in 2021 to 340mt 2030, and Australia will continue to be the dominant producer in the supply of seaborne metallurgical coal with 175mt in 2020 and 190mt by 2030.