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Mining
Aussie coal producers — led by Whitehaven Coal (ASX:WHC) — charged higher this morning as investors digested news of an Indonesian coal ban that could put a rocket up thermal coal prices and redirect coal flows across the Asia Pacific region.
It shows 2021 was hardly the end for madness in the seaborne coal market, which has been sent haywire by supply shortages and disruptions, China’s ban on Australian coal, a cold northern winter, and Covid.
Indonesia was China’s favourite choice to displace Australian coal imports, unofficially banned from the Asian nation since October 2020 after relations between the Morrison Government and Xi Jinping’s China turned frosty.
Around 177Mt entered from Indonesia in the 11 months to November last year, a 54% increase on 2020.
Indonesian coal also heads to India, South Korea and Japan where Australian miners are currently redirecting shipments that once headed for Chinese waters.
Indonesia produces around 600 million tonnes of thermal coal a year, and the local coal mining lobby the APBI has said the ban — designed to ensure supply to domestic power plants — could impact 38-40Mt of production.
It could also be unwound in short order too though, with a month of production in Indonesia representing up to a third of the annual domestic market, analysts told Reuters.
Newcastle coal was buying ~US$157/t yesterday. Prices for coking coal out of China and Australian meanwhile have flipped, with a December collapse in Chinese domestic prices seeing premium met coal FOB the Dalrymple Bay terminal in Queensland overtake Chinese prices, which had climbed above US$600/t in mid-2021.
Premium hard coking coal FOB DBCT was paying US$359.58/t according to Fastmarkets MB on Monday, with Chinese product of similar specs buying US$346.13/t.
Whitehaven was quick out of the blocks on a morning of rabid buying for the big resources stocks as the ASX returned from its New Years sojourn.
WHC was up 7.28% at 11am AEDT, New Hope Corporation (ASX:NHC) was up 4.88% and Yancoal (ASX:YAL) was 5.77% higher.
Lithium stocks, meanwhile, continued their 2021 form on the first trading day of the new year with Pilbara Minerals (ASX:PLS), AVZ Minerals (ASX:AVZ), Lake Resources (ASX:LKE), Allkem (ASX:AKE) and Liontown (ASX:LTR) all rising more than 6.5%, and iron ore miners were well in the green, driving the Materials index to a 1.63% gain.
St Barbara (ASX:SBM) shares copped a hit this morning after the gold miner announced it had laid down a deep sea tailings pipeline at the Simberi operations in PNG.
Full processing is expected to take place over the coming week after wet commissioning of the pipeline was completed.
SBM says it plans to produce 60,000-70,000oz of gold at Simberi in 2021-22, but some analysts disagree.
RBC’s Alexander Barkley said initial estimates for commissioning of the pipeline has been late December Quarter, and the investment bank expects Simberi will deliver just 50,000oz this financial year, at least 10,000oz shy of guidance.
Barkley, who has a $1.25 price target and sector perform rating on St Barbara, said the miner which also owns the Gwalia and Atlantic Gold Operations in WA and Canada, respectively, was still on track to make overall guidance.
“We had flagged that operational issues form a short-term concern for SBM,” he said in a note.
“Any Simberi downgrades would contribute to this (16% of RBCe FY22 production, 23% FY23). However, we forecast group production of 318koz, within guidance of 305-355koz.”
Not all analysts are bearish on St Barbara, which has suffered a series of operational kinks in recent years. Consensus has the company as a moderate buy with a price target of $1.86.
Goldman Sachs issued a $2.40 price target in October, suggesting the gold miner – which announced a takeover of junior Bardoc Gold (ASX:BDC) in December – was trading at a wide discount to other gold producers.
SBM was down 3.4% to $1.415 this morning.
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