Coronado Global Resources is hopeful that China’s suspension of Australian coal imports may have a positive long-term effect, with the impact to be offset by global steel producers restarting activities.
The coal miner stated that while the nature and duration of the import restrictions are unclear, they may reflect largely fulfilled Australian coal import quotas.
Company chief executive officer Gerry Spindler said that while the Curragh mine does not regularly supply Chinese customers, the company was still impacted by the fall in benchmark pricing.
“By the end of December 2020, the benchmark index closed the year at $102 per tonne,” Spindler said.
“This represents a decline of 27 per cent during the December 2020 quarter. In comparison, the China prime hard coking coal index concluded 2020 (at) $202 per tonne, which represented an increase of 36 per cent during the December quarter.
“The divergence between Australia and China benchmark price was driven by import restrictions on Australian metallurgical coal.”
Coronado anticipates that steel demand from China will remain robust throughout 2021, underpinned by further infrastructure investment.
This comes as steel producers around the world ramp up production, after blast furnaces restarted late last year in Japan, South Korea, Europe and Brazil.
Coronado also reported that steel demand in India has risen to “near pre-lockdown levels”.
The company still battled against a difficult coal market during the December quarter, with saleable metallurgical coal production down by 4.5 million tonnes or 3.2 per cent compared with the September quarter.
This included its Australian operations the Curragh coal mine in central Queensland, with operations down by 600,000 tonnes on the record September quarter production efforts of 3.6 million tonnes.
Run of mine (ROM) production at Curragh during the December period also decreased by 14 per cent and saleable production dropped by 16.5 per cent.
Coronado attributed the lower ROM production to high rainfall impacting overburden movement and mine sequencing, which in turn, delayed mining and negatively impacted saleable coal production.
In early January, the company received some financial relief, as it completed sale and leaseback of heavy mining equipment assets from the Curragh site, which generated $23.3 million.