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BHP cuts Australian met coal sales guidance again

Australian mining firm BHP has cut its coking coal guidance for the 2023-24 fiscal year to 30 June to a new decade-low of 43mn-45mn t because of the impact of wet weather and cyclones on its Queensland operations.

The BHP Mitsubishi Alliance (BMA), which is 50pc owned by BHP and 50pc by Japanese trading house Mitsubishi, had already cut its guidance by 18pc in January to 46mn-50mn t of metallurgical coal for 2023-24, down from the previous guidance of 56mn-62mn t issued in July. At that time it cited the impact of the sale of the Blackwater and Daunia coking and thermal coal mines in Queensland to Australian independent Whitehaven, which it completed on 2 April, maintenance, a fatality at its 10mn t/yr Saraji mine and increased removal of waste.

The latest downgrade was blamed again on the Saraji incident, as well as on wet cyclonic weather in Queensland and an inventory rebuild after the impact of flooding and labour shortages in 2022 and 2023. The inventory rebuild will continue into calendar year 2025, which could further weigh on sales into 2024-25.

The further reduction in expected sales volumes led BHP to increase its cost guidance for 2023-24 to $119-125/t from $110-116/t in January and from $95-105/t in June.

BHP received an average price of $274.99/t for hard coking coal and $204.55/t for weak coking coal during July-December, up from $242.52/t and $190.74/t for January-June and $270.65/t and $252.12/t in July-December 2022. It defines hard coking coal as those with a coke strength after reaction (CSR) of 35 and above, with weak coking coal being those with a CSR of below 35.

Argus last assessed the premium hard low-volatile metallurgical coal price at $249/t fob Australia on 17 March, down from $336.50/t on 17 January.

By Jo Clarke

BHP metallurgical coal sales (mn t)
Jan-Mar ’24Oct-Dec ’23Jan-Mar ’23Jul-Mar ’23-24July-Mar ’22-23
Coking coal5.414.765.3714.6616.86
Weak coking coal0.930.750.712.212.04
Thermal coal0.
Total BMA6.365.716.1917.3919.70
Total BMA (100%)12.7211.4112.3734.7839.39
Source: BHP

Australian metallurgical coal prices ($/t)

Source: Argus Media