Commodities

Whitehaven Coal Says Labor Shortages a Challenge — Commodity Comment

Whitehaven Coal Ltd. on Monday said full-year run-of-mine coal production was weaker year-on-year but at the upper end of its guidance. The company also said it expects to report its strongest-ever fiscal result for the year through June, including earnings before interest, taxes, depreciation and amortization of roughly 3.0 billion Australian dollars (US$2.0 billion). Here are some remarks from its fourth-quarter operational report.

On its fourth-quarter coal production:

“All mine operations performed broadly in line with plan including Narrabri’s scheduled longwall step around from panel 110A to panel 110B which commenced in mid-June and is due to complete in late July when longwall production resumes. While mine operations performed well and sales were strong, intermittent rain disruption was experienced, Covid-related absenteeism continued albeit below peak levels experienced in the March quarter, and general labor shortages remain a key challenge for the business.”

On thermal-coal prices:

“For the past seven quarters we have seen consecutive increases in the gC NEWC quarterly index, with the June quarter gC NEWC index reaching a new record high of US$377 [a metric] ton, exceeding the previous record high in the March quarter by US$113/ton. We continue to view thermal-coal prices as well supported for CY22 [calendar year 2022] and into CY23, even more so with the heavy rainfall in the Hunter Valley in early July.”

On thermal-coal demand:

“Global supply constraints continued during the June quarter, particularly for high quality thermal coal. Buying interest has continued from our customers in Northeast Asia who are focused on replenishment of stocks for the northern hemisphere summer period. Interest from non-traditional buyers of Australian thermal coal also continued to progress including from European end users. The European coal import embargo from Russia is due to commence in August which is expected to tighten further the supply of high quality thermal coal. An unexpected cold snap in June on the east coast of Australia and domestic coal supply issues saw a government mandated redirection of coal to the domestic market. While Whitehaven’s high quality coal is not in demand for domestic supply, this action placed further pressure on seaborne export supply and prices.”

On steelmaking coal markets:

“The metallurgical coal market experienced a more turbulent June quarter for pricing and sentiment compared to thermal markets. Demand was affected by Covid lockdowns in China and steel export tariffs in India as well as softened demand for finished steel products globally, including Japan. In metallurgical markets, while pricing is relatively strong compared to historical levels, we expect to see further volatility due to global economic pressures.”

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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