ASX shares in focus amid EU ban on Russian coal
The ban on importing Russian coal into the European Union has now been in effect for almost a week. The implementation of a Russian coal embargo is expected to affect Russia’s lucrative fossil fuel revenues. This embargo is part of the measures taken against Russia to target its economy with sanctions on SWIFT payments, hydrocarbon exports, travel, flights and other areas in response to its invasion of Ukraine.
Meanwhile, the European Union’s dependence on coal imports is causing concern, as around half of the region’s coal needs are met by Russia.
However, this news seems favorable for Australian coal companies, as Australia is among the major coal exporting countries. According to the latest Resources and Energy Quarterly Report, Australia is the world’s largest exporter of thermal coal and the second largest exporter of metallurgical coal.
On that note, here’s a look at the latest performance of a few of the major ASX-listed coal stocks as of midday August 16, 2022 – Whitehaven Coal Ltd (ASX:WHC), New Hope Corporation Limited (ASX:NHC), Coronado Global Resources Inc (ASX: CRN) and Ikwezi Mining Ltd (ASX: IKW).
Whitehaven Coal Limit (ASX: WHC): Based on the quarterly report for the period ended June 30, 2022, the company hit record coal prices at AU$514/t for the quarter and AU$325/t for FY22.
Total sales of produced coal reached 4.4 Mt for the June quarter, up 23% quarter over quarter. Thermal coal and metallurgical coal made up 84% and 16% of June quarter coal sales, respectively.
Managed sales of coal produced by the Company were 17.6 Mt for FY22 and on track for FY22.
The company expects to record FY22 EBITDA of approximately A$3.0 billion, well above the FY21 value of A$0.2 billion.
New Hope Corporation Limited (ASX: NHC): The ASX-listed company recently completed the acquisition of a 15% stake in Malabar Resources Limited for a total investment of A$94.4 million. The Malabar-owned Maxwell Mine project received final state and federal approvals after securing a mining lease in November 2021. Construction of the underground metallurgical coal project began in May 2022.
On the operational performance side, the company updated that the disruptions due to wet weather in Bengalla and the Hunter Valley supply chain were partially offset by strengthening coal prices.
The company is expected to publish its quarterly activity report during the current month.
Coronado Global Resources Inc.. (ASX: CRN): In the June 2022 quarter, the company reported record revenue of US$1,033 million, beating the previous quarter’s record by 9.0%.
Group capital expenditure was US$91.5 million for the six-month period ended June 2022. Dividend payments of US$351 million for the first half of 2022 were completed in April and June. Closing cash was US$486 million, while net cash was US$171 million as of June 30, 2022.
The company also highlighted its penchant for the environment and the climate. It includes emission reduction plans and targets as mentioned in the 2021 sustainability report.
Yancoal Australia Ltd (ASX: YAL): For the June 2022 quarter, the company reported attributable salable coal production of 7.4 Mt and attributable coal sales of 7.9 Mt.
The average realized coal price was AU$368/t for the June quarter and AU$314/t for 1H. The combined thermal and metallurgical coal sales generated a 234% year-over-year increase in the total realized price for 1H. The company reported record cash generation at A$2.8 billion for the first half of 2022.
The company expects attributable salable coal production of 31 to 33 million tonnes in 2022, down from a previous forecast of 35 to 38 million tonnes. In addition, cash operating costs are expected to be A$84-89/tonne (previously $71-76/tonne).
The company has revised its operating cost forecast due to the impacts of COVID-19, rising diesel prices and torrential rains that heavily impacted its production in the June quarter.
Ikwezi Mining Ltd (ASX: IKW): According to the company’s business report for the June 2022 quarter, the Kliprand pit reported a 37% decrease in run-of-mine (ROM) production. In addition, a significant drop in production at the Emoyeni washing plant was observed.
The main reason for this substantial drop in production is the floods in KwaZuluNatal province.
E&D spending was nil for the June quarter, while mining production spending was A$15,957 million.