Coal news and updates

Farallon and Co put price on coal’s pariah status

Climate-change concerns are making it ever harder for coal-mining companies to raise money. A group of hedge funds has put a price on the fossil fuel’s status as a financial pariah: a whopping 11.5% interest rate on a five-year secured loan. That’s what Canyon Capital, Farallon Capital and Varde Partners are charging to lend around half the $1.3 billion Australia’s Stanmore Resources (SMR.AX) agreed in November to pay for some BHP (BHP.AX) assets.

Even that pricing is likely to be unattainable for many rivals: Stanmore and the BHP unit mine coking coal used in steelmaking, a type of the commodity that has yet to receive the same opprobrium from bankers, bondholders and shareholders as thermal coal, which is used to generate electricity.

With coking coal prices at or near record highs, Stanmore can afford it. At an average of $250 a tonne, its net debt will be less than the company’s estimated 2022 EBITDA. If prices retreat back to 2020 levels, Stanmore and its lenders will have to tread more carefully. (By Antony Currie