Coronado Coal says higher costs, taxes and bad weather are squeezing its mining operations, pushing profits almost 80 per cent lower over the last year. A 21.7 per cent rise in the cost of producing each tonne of coal and a taxes and royalties bill of $US630 million ($965 million) drove down the miner’s full year statutory profit to $US156.1 million on Tuesday, compared to $US771.7 million a year earlier.
Coronado, which operates mines in Queensland and Virginia and West Virginia in the United States, said revenue slid 19.1 per cent to $US2.9 billion in the 12 months to December from $US3.6 billion in last financial year due to a decline in the price of metallurgical coal following record highs set by Russia’s invasion of Ukraine. The company owns the Curragh coal mine in Queensland and others in the US. It mostly produces coking coal – a crucial element in steel making – and some thermal coal byproducts. Earnings collapsed 68.6 per cent to $US381.7 million from $US1.2 billion in the prior period.
“In a year of sustained high met coal prices, albeit lower than financial year 2022 levels, we were challenged by high inflation, increased taxes and royalties, numerous weather events in Queensland, and some unforeseen geotechnical events in the US,” said Douglas Thompson, managing director and chief executive.
Coal production and sales were dented over the year after mining at Curragh was put on hold for 19 days due to above-average wet weather in Queensland and poor geotechnical conditions at both its Curragh and Buchanan mine in the US. A train derailment and delays at RG Tanna Coal Terminal in Queensland slowed sales further. Production dropped 1.1 per cent, and sales by 3.4 per cent, to 15.8 million metric tonnes.
Coronado, which is set to be majority owned by Sev.en Global Investments, owned by Czech billionaire Pavel Tykac, paid $US147 million in tax, $295 million in royalties to the Queensland government, $51 million in the US, and a mine rebate of $137 million.
The miner sold its coal for $215.70 per tonne last year, compared to $265.80 per tonne in the year prior, when prices were driven up by the effect of Russia’s invasion of Ukraine.
“The first half of 2023 saw met coal index prices decline significantly as steel demand weakened, however, met coal prices trended upwards in the second half of 2023 due to tight supply and port constraints in Australia,” the company said.
Coronado declared a fully franked dividend of US0.5¢ per share. Shares fell 11¢, or 6.76 per cent, to $1.38 on Tuesday morning.
Written by Elouise Fowler is a journalist for The Australian Financial Review
