February 19, 2021 Read More →

Losses mount for Australian coal miners as global energy transition picks up speed

Renew Economy:

Whitehaven Coal has become the latest Australian miner to announce massive losses as the collapsing thermal coal price continued to wreak havoc on the industry.

In the six months to December, Whitehaven lost $94.4 million. It comes a day after BHP revealed it was writing down the value of its thermal coal assets by $US1.6 billion, while Anglo-Swiss miner Glencore – the biggest coal exporter in the world – lost more than $US500 million on its Australian thermal coal business, also thanks to write-downs.

The miners say losses were driven by a pandemic-induced drop in demand and China’s decision to ban Australian coal imports. That added to the global shift away from thermal coal towards low-emissions alternatives.

As AGL’s half year results showed last week, Australian power generators are struggling to make any money at all out of coal-generated electricity thanks to the rapid rise of renewable capacity, and that is also driving the push away from thermal coal. It’s a global trend which is moving rapidly in one direction.

With Australia’s other key export markets – Japan and South Korea in particular – also ramping up their emissions reduction plans, diversified miners are aggressively switching away from coal. BHP has effectively given up on thermal coal and is in the process of ditching the high-carbon commodity in favour of minerals needed in renewable energy and electrification – in BHP’s case iron ore, copper and nickel. Whitehaven, though, remains totally dependent on coal.

The prognosis for pure play coal miners like Whitehaven couldn’t me much grimmer, especially since 85 per cent of the coal it exports is thermal, and only 15 per cent is metallurgical. But in a pre-recorded speech, Whitehaven’s CEO Paul Flynn tried to remain upbeat, insisting the price of coal would recover as the COVID-induced downturn ends.

[James Fernyhough]

More: Collapsing thermal coal price pushes miners deep into the red

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