Whitehaven Coal has felt the impact that trade tensions between the United States and China have had on global coal demand.
This translated to a 91 per cent drop in Whitehaven’s net profit to $27.4 million.
Trade disputes between the two power nations caused softness in global demand for thermal coal and weakness in seaborne thermal coal prices, according to Whitehaven.
However, the phase one trade deal between the United States and China is expected boost global trade.
Whitehaven’s run of mine coal production for the first half of the 2020 financial year was six million tonnes, 30 per cent below the prior corresponding period.
The coal miner attributed this to an eight-week longwall change out at the Narrabri mine in New South Wales, and further challenging conditions at the nearby Maules Creek mine, which experienced labour shortages and production disruption due to drought and bushfires.
The coronavirus outbreak also caused a temporary loss in demand for coal in China, but the country’s supply of coal was reduced as a result.
A more positive result for the half financial year was Whitehaven’s completed acquisition of EDF Trading Australia, bringing its ownership of the Narrabri mine to 77.5 per cent.
“The first half result has been impacted by a softening of the Newcastle Index thermal coal price,” Whitehaven managing director and chief executive Paul Flynn said.
“The payment of a modest dividend reflects our confidence in the fundamentals of the business and the prospects of a stronger second half.”
Whitehaven’s production guidance for the remainder of the financial year remains unchanged, with 10–11 million tonnes at Maules Creek, 6–6.5 million tonnes at Narrabri and 4–4.5 million tonnes at Gunnedah in New South Wales.