Ground Breakers: Coal miners lead the early gains as Russian coal ban looms

Coal miners leading the way this morning, with big gains ahead of an EU ban on Russian coal
Japanese energy company Idemitsu Kosan says Aussie coal prices will average US$310.1/t this year
St Barbara shares hammered on FY23 guidance update

Coal miners have again found favour with the market ahead of the start of a ban on Russian coal in the European Union.

Whitehaven Coal (ASX:WHC) and Yancoal (ASX:YAL) led the large caps this morning, gaining by 3.3% and 2.65% respectively as investment money flows into things that seem bad for the world but we’re gonna need anyway.

Coronado (ASX:CRN), Stanmore (ASX:SMR) and New Hope (ASX:NHC) each appeared on the mid-cap leaderboard, with $2.5b capped CRN up 7.03%, Stanmore rising 3.86% and New Hope gaining 3.48%.

The run comes ahead of a trade embargo today from the European Commission on Russian coal cargoes which was first floated in April, and according to Coronado Global Resources CFO Gerhard Ziems, has already triggered a change in buying behaviour by European steelmakers and power suppliers.

Japan’s second largest oil refiner and Australian coal producer Idemitsu demonstrated the ongoing strength of international energy markets overnight, lifting its annual profit forecast by 70% to a record 280 billion yen (US$2.1b).

Idemitsu finance department executive Yoshitaka Onuma said Australian coal had emerged as an alternative for falling Russian supply following its invasion of Ukraine, lifting its spot assumptions for 2022 from US$180/t to US$310.1/t.

Idemitsu exports around 14Mt of thermal, semi-soft and PCI coal each year from operations in New South Wales and Queensland but has reportedly put a major stake in Queensland coal miner Ensham Resources on the market in recent months.

Coal miners share prices today:

St Barbs sinks on guidance

Higher costs have seen St Barbara (ASX:SBM) shares cop a 10.3% whack after the gold miner revealed its guidance for FY23, announcing it will produce 280-315,000oz in FY23 at all in sustaining costs of $2050-2150/oz.

That includes 170,000-185,000oz at $1900-2100 at its flagship Gwalia operations, with lower grades and a 23% increase in material mined combining with inflationary pressures to push costs up.

The announcement that St Barbs has received approval for a tailings lift to avoid the early closure of the Touquoy pit at its Atlantic Gold Operations in Canada were cold comfort for investors, who will expect to see the gold miner deliver 40-50,000oz at Atlantic at $1950-2250/oz and 70-80,000oz at Simberi in PNG at $2200-2400/oz.

The announcement comes in the context of potential merger talks with Genesis Minerals (ASX:GMD) and its high profile boss Raleigh Finlayson, which dominated M&A discussion on the first day of last week’s Diggers and Dealers Mining Forum.

RBC analyst Alex Barkley said the announcement, which included the extension of the Atlantic operations, was ‘reassuring’ but did not expect a positive trading result due to the miner’s recent outperformance of the ASX gold space.