Coronado Coal Suffers Setback Amidst Declining Global Coal Prices

Coronado Coal, a prominent mining company operating in both Australia and the United States, has joined the ranks of other industry giants who have been negatively impacted by the slump in global coal prices. In the 12 months leading up to December, the company reported a significant decrease in revenue, with a slide of 19.1% to $US2.9 billion.

The primary reason behind this decline can be attributed to the fall in the price of metallurgical, or steelmaking, coal. The boost in global coal prices that occurred two years ago following the Russian invasion has gradually faded, resulting in a subsequent drop in revenue for Coronado Coal.

The year 2023 proved to be particularly challenging for the company, as it faced a series of unfortunate events. Higher costs, increased taxes, and adverse weather conditions were all factors that contributed to an alarming 80% drop in earnings. Production declined by 1.1%, while sales experienced a 3.4% decrease, amounting to 15.8 million metric tonnes.

The average price of coal in 2023 fell by 18.8%, reaching $US215.70 per tonne compared to $US265.80 per tonne in the previous year. Furthermore, the cost per tonne saw a significant jump of 21.7% to $US107.60, highlighting the financial strain faced by Coronado Coal.

The combination of these factors ultimately led to a near 22% increase in the cost of coal per tonne. Coupled with a substantial taxes and royalties bill of $US630 million ($A965 million), the company’s full-year statutory earnings plummeted to just $US156.1 million in 2023, a stark contrast to the $US771.7 million recorded a year earlier.

Coronado Coal operates various mines, including the Curragh coal mine in Queensland, where it produces coking coal as well as lower grade thermal coal. However, adjusted EBITDA fell significantly by 68.6% to $US381.7 million from $US1.2 billion in the previous period.

The challenges faced by Coronado Coal in 2023 were acknowledged by CEO Douglas Thompson. He highlighted the impact of high inflation, increased taxes and royalties, multiple weather events in Queensland, and unforeseen geotechnical issues in the US as contributing factors to the company’s setbacks.

Over the course of the year, coal production and sales were hampered due to the interruption of mining operations at Curragh caused by prolonged wet weather in Queensland. Additionally, poor geotechnical conditions at both Curragh and the Buchanan mine in the US further exacerbated the situation. Moreover, a train derailment and delays at the RG Tanna Coal Terminal in Queensland resulted in sluggish shipments to customers.

Coronado Coal’s majority ownership lies with Sev.en Global Investments, which is owned by Czech billionaire Pavel Tykac. While the company faces significant challenges, it remains optimistic about the future and continues to explore ways to navigate the uncertain coal market.