Pic: Via Getty
Monsters of Rock: Coal prices ‘at levels not seen since mid-2008’
Mining
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The miners were not spared in what was one of the ASX’s worst days this year.
Just check out this sea of vibrant red:
Also trading ex-dividend today was $14.8 billion market cap BHP spinout South32 (ASX:S32), which finished down ~5%.
At the coalface
Premium Low Vol CFR China – a benchmark for Chinese coking coal imports — hit an all-time high of $US410/t last month. Thermal coal prices are doing even better.
Classic coal prices – making a move like this after every institutional investor signed up to ESG 😂 For once we don’t have a position (coal isn’t really our jam) much as I love to be on the other side of institutional consensus! pic.twitter.com/SFS9kkomjn
— Michael Frazis (@michaelfrazis) September 8, 2021
Aussie Minister for Resources and Water Keith Pitt says coal is Australia’s second largest export — and that won’t be changing any time soon.
“The reality is that global demand for Australian coal is increasing and forecast to continue rising into the next decade at least,” Pitty says.
“With coal prices currently now back at near record highs, the royalties and taxes paid by the industry will make an even more important contribution to the national economy as our recovery from the global COVID pandemic continues.”
With coal prices hitting 12 year highs locally, the big boys of coal like Yancoal (ASX:YAL) and Whitehaven (ASX:WHC) are raking it in.
Their share prices are up ~12% and 27%, respectively, over the past month – but both remain well down on all-time highs.
Resurgent small cap producer TerraCom (ASX:TER) today said its Queensland asset ‘Blair Athol’ will be a big cash generator as strong coal pricing continues throughout FY2022.
(Fun fact #1: the company purchased Blair Athol for a nominal $1 back in 2017. Absolute bargain.)
“Blair Athol is forecast to generate revenue of AU$178 per tonne in September 2021 which will generate an operating cash margin in excess of AU$100 per tonne,” the company says.
“Both the Newcastle Index and API4 are nearing all-time highs and are at levels which have not been seen since mid-2008, being twelve years ago.”
(Fun Fact #2: It’s 13 years, actually.)
“Based on economic forecasts the indexes are expected to remain solid throughout FY2022 and as a result, the Company expects to generate strong operating cash flows from Blair Athol in FY2022,” TerraCom says.
