Australian miner Whitehaven Coal Ltd. reported weaker coal output but higher sales for the three months through December versus the quarter immediately prior. The company expects strong demand for high caloric value coal. Here are some remarks from its quarterly operations report.


On the thermal-coal market:

"The high CV coal market ex the Port of Newcastle has seen strong buying from Hunter Valley coal producers seeking supplementary volumes to meet committed sales with shortfalls stemming from weather-related production impacts.

"A relatively mild Northern Hemisphere winter to date has resulted in softer demand from thermal coal end users in Europe and Northern Asia with stocks remaining high. Spot buying from end users toward the end of the December quarter and into the March quarter has primarily been for cheaper off-specification coals in order to average down costs.

"We continue to see end users focus on longer-term energy security requirements, with significant interest for high CV thermal coal from April 2023 onward. This timing coincides with the commencement of import restrictions for Russian coal by Japanese power utilities.

"Given the lack of available supply side response, we continue to see thermal coal prices being well supported throughout CY23. We continue to see strong demand for high CV coal and tight supply, particularly with the sanctions/bans on Russian coal to Europe, Japan and some segments in Taiwan."


On coal sales:

"With production shortfalls of high CV coal from both Maules Creek and Tarrawonga, there was less opportunity to blend and uplift mid CV product into high CV product during the period. As a result, high CV coal sales represented 71% of thermal coal sales in the quarter or 66% of overall coal sales, with 27% being mid CV specification thermal coal and 7% being metallurgical coal. With lower high CV coal production and sales, the average realized thermal coal price for the quarter was a 7% discount to the gC NEWC [globalCOAL Newcastle] index."


On the metallurgical-coal market:

"Recent announcements regarding the lifting of Covid-related restrictions and lockdowns in China and Chinese restrictions on Australian coal imports has spurred a rally in metallurgical coal prices with the Platts PLV HCC Index jumping above US$300/ton for the first time since June 2022. Despite this increase in met coal prices, the inversion of metallurgical and thermal coal prices continues to incentivize the sale of high CV thermal coal over metallurgical coal.

"While pricing is relatively strong compared to historical levels, we expect further volatility due to ongoing global economic pressures."


On mining operations:

"At the open cut mine operations -- Maules Creek, Werris Creek and Tarrawonga -- La Niña weather events impacted the first half of the December quarter. Rain and flooding events slowed ROM [run-of-mine] production, predominantly at Maules Creek and Tarrawonga. However, December quarter ROM production was up 21% on the September quarter, underpinned by continued strong performance at Narrabri.

"Saleable coal production was down 4% primarily due to fewer coal processing days because of flooding related loss of access to open cut sites and the Gunnedah coal handling and preparation plant (CHPP). Economy-wide labor shortages also remain an issue for our operations."


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


(END) Dow Jones Newswires

01-19-23 1754ET