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More rainfall cuts Coronado’s Australian coal outlook

US-Australian coal producer Coronado Coal is factoring in new Australian wet weather patterns in its unambitious saleable coal guidance of 16.4mn-17.2mn t for 2024.

Wetter than expected weather in Queensland in 2023 and port delays contributed to Coronado selling 15.8mn t of coal in 2023, missing its revised guidance of 16.2mn-16.4mn t. Coronado is investing to expand metallurgical coal sales from Australia and the US, yet the 2024 guidance compares with the original 2023 target of 16.8mn-17.2mn t set in February 2023.

This is partly to allow growth plans to push production across Australia and the US to 20.5mn t/yr over the next couple of years. But it also reflects the firm allowing for extra disruption from heavy rainfall at its Curragh operation in Queensland, rather than using a straight 10-year average, as has been standard.

After a very wet 2020-22, associated with the La Nina weather pattern, 2023 was meant to be a drier year dominated by an El Nino trend that usually brings drier than average weather to the east coast of Australia. But the coal mining regions in Queensland have had a wet 2023, with particularly heavy rainfall from November 2023 into 2024. This is forcing mining firms to reconsider their production and sales expectations from mines in Queensland.

Australian coking coal exports for 2023 were 151.28mn t, which is the least shipped since 2012, down from 160.53mn t in 2022 and a peak of 186.83mn t in 2016, according to Australian Bureau of Statistics data supplied by GTT. This was despite firmer prices in 2023, particularly for high-grade metallurgical coal sold from Queensland, that should have driven producers to increase supplies. Demand for Australian coking coal will continue to grow driven by India but supplies remain constrained, according to Coronado chief financial officer Gerhard Ziems.

Coronado reported a profit of $156.1mn in 2023, down from $771.7mn in 2022, but maintained a modest dividend payout as it looks to deploy capital to grow its capacity to supply the metallurgical coal business.

It has internal growth plans, including expanding the Curragh metallurgical and thermal coal mine in Queensland to 13.5mn t/yr in 2025 and its US coal mines to 7mn t in 2025.

The Argus premium hard coking coal price averaged $295.86/t in 2023, down from $365.60/t in 2022 but up from $223.16/t in 2021 and $124.26/t in 2020.

By Jo Clarke

Australian metallurgical coal prices ($/t)