New Hope warns winter is coming for coal buyers
New Hope has spent the past 14 years trying to get government approvals for an expansion of its Acland mine in Queensland’s Darling Downs, and Mr.
“The thing that’s very different from the coal boom of 2012 is that it took you 18 months to start a mine. Now it’s a five to ten year thing, ”he said on Tuesday.
“So in Australia you won’t have the supply side response that you would normally have in a market when you have that kind of price.
“In my opinion, we will have a strong pricing environment for some time.
“We have a few [coal supply] offers out there for the first quarter of next year which are at significant premiums to the index.
“People buy coal from us above the index to make sure they get what they want. It’s a kind of Nordic winter.
The rise in coal prices has been extremely steep since the raw material hit less than US $ 50 per tonne in August 2020.
A series of supply disruptions have left the thermal coal and coking coal markets extremely tight this year, starting in March when inclement weather damaged port and rail infrastructure in the NSW Hunter Valley.
New Hope’s flagship asset is the Bengalla mine in the Hunter Valley, which has defied the disruption to gradually sell more coal than last year, despite a 6% drop in production due to a maintenance campaign.
New Hope lost $ 55.3 million in the six months leading up to Jan.31, but recovered to post a profit of $ 79.3 million for the year ending July 31.
Turnover was 3% lower than the previous year.
Shareholders will receive a fully franked final dividend of 7 after receiving an interim dividend of 4 in May.
New Hope accessed $ 5.86 million under the federal government’s JobKeeper program in the past year, in addition to the $ 3.9 million in JobKeeper payments during the year through July 2020 .
Retailer Harvey Norman has repaid a minority portion of the JobKeeper grant it received, but Mr Schmidt said New Hope has no plans to repay the money.
“It is not reasonable to criticize the decisions taken 12 months ago to access JobKeeper,” he said.
“The company, depending on where the coal prices were below $ 50, JobKeeper gave it those few months to help it survive.
“We met the criteria and used them in a way that supported our people. “
New Hope appears poised to make acquisitions, having recently issued a $ 200 million convertible note. The company has $ 465 million in cash and $ 140 million in unused debt.
The company has been seen as a likely bidder for the coal assets BHP is trying to sell, but Schmidt said he has also looked at the copper assets recently.
“We look at anything and everything from a growth opportunity perspective. Not just coal. We looked at a lot of things, ”he said.
“We will buy products that are immediately profitable and that work and if we can’t get a deal, we can’t get a deal. “
New Hope’s copper asset review comes just as its 37.6 percent shareholder, Washington H. Soul Pattinson, prepares to conduct an initial public offering (IPO) of its Australian copper assets.
Rival miner Yancoal said in August that its Moolarben coal mine in NSW was operating with around 10% less staff than normal due to pandemic precautions, but the virus in the basins coal mines.
Production from iron ore and copper mines in Brazil and Chile has declined over the past year due to high absenteeism rates linked to the pandemic.
Mr Schmidt said New Hope had started testing staff at the Bengalla mine quickly for antigens and the workforce had been separated into “bubbles” to make sure there was no mixing between teams from different parts of the mine.
“People are very disciplined to follow the rules,” he said.
Mining at Acland will end in October and the last coal from the mine shipped before the end of the year, but New Hope will continue to fight for permission to expand the mine outside the Queensland Land Court in November. .