The Coal Trader

BHP aims for top of Australian thermal coal guidance

Australian resource firm BHP expects to come in near the top of its 13mn-15mn t thermal coal production guidance for its July 2023 to June 2024 financial year, after a strong October-December.

BHP’s New South Wales Energy Coal (NSWEC) production was 3.86mn t in October-December 2023, up from 3.61mn t in July-September and from 2.85mn t in October-December 2022 when floods disrupted mining and coal supplies to the NSW port of Newcastle. It produced 7.47mn t in July-December (see table), which if repeated in January-June this year, would bring the total output for its 2023-24 financial year close to the top of its guidance. January-June are often stronger production months for NSWEC as it pushes output ahead of the end of financial year.

NSWEC delivered 538,000t of coal to domestic consumers in July-December to meet its obligations under the New South Wales (NSW) government’s thermal coal reservation policy compared with nothing a year earlier. The state government has directed NSWEC to deliver at least 175,000t per quarter at a price cap of A$125/t, meaning that BHP needs to deliver 178,000t in January-June to meet its obligations for the 2023-24 financial year.

NSWEC’s domestic sales are of unwashed coal rather than higher-grade washed export coal, which contributed to the uptick in total saleable volumes produced, according to BHP. An easing of labour market constraints and improved weather conditions also boosted output, with record annualised truck hours delivered in July-December.

BHP’s application to extend the mine life of the 20mn t/yr Mount Arthur, which is NSWEC’s only remaining coal mining asset, to 2029-30 from 2025-26 was on public exhibition in November and the firm expects the approval process to continue through to June 2024. This forms part of its plans to close the mine rather than sell it, which BHP appears to be pursuing despite the NSW government’s plans to increase coal royalties from 1 July.

NSWEC realised an average coal price of $123.29/t in July-December 2023, down from $157.21/t in January-June 2023, and from $354.30/t in July-December 2022. The Argus high-grade 6,000 kcal/kg NAR price averaged $139.15/t fob Newcastle, with the 5,500kcal/kg NAR coal price at $92.11/t during July-December, compared with $212.07/t and $115.65/t respectively for January-June.

By Jo Clarke

BHP thermal coalmn t
Oct-Dec ’23Jul-Sep ’23Oct-Dec ’22Jul-Dec ’23July-Dec ’22
Export sales4.253.312.867.565.3
Source: BHP

Australian thermal coal prices $/t