One of the nation’s largest independent coal mining companies suffered heavy losses in the second half of calendar 2020.
In the first half of the 2021 financial year Whitehaven Coal lost more than the sum of its full net profit for fiscal 2020.
Previous year’s profit gone
The proponent reported a $94.5 million net loss after tax for the period between July and December 2020. The figure was more than three times lower than its $30M net profit after tax for the entire previous fiscal year.
When compared to the first half of FY2020, Whitehaven revenue dropped 21 per cent to $699.3M and cash generated from operations fell 55 per cent to $54.9M.
Earnings before interest, taxes, depreciation and amortisation also dwindled 79 per cent to $37.2M compared to the same time in 2020. This was due to a “lower average achieved coal price” of $80 per tonne compared to $108/t the same time last year.
Weak seaborne coal market
Whitehaven blamed its performance on a weaker seaborne coal market indirectly caused by China’s recent ban on importing Australian coal.
“Even though Whitehaven does not have direct exposure to China, the Chinese import restrictions for Australian sourced coal does have an impact on the seaborne coal market,” the company said in its latest results.
“China’s restrictions have altered seaborne coal trade flows where, instead of being delivered to China, Australian coal is now finding customers in alternate destinations including India, Pakistan and the Middle East, and traded coal historically delivered into these markets is finding its way into China.”
The proponent is still optimistic about the second half of the financial year, following a recent recovery in coal spot prices and rising demand from other Asian markets.
“Prices for Australian origin metallurgical coal were weak through the December quarter however have sharply increased in recent weeks,” it said.
“Following India’s mid-year COVID-19 lockdown, demand has rebounded strongly and it continues to be a growing destination for Whitehaven’s metallurgical coal products.”
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The company has also renewed its term metallurgical coal sales contracts, and predicts sales volumes will return to pre COVID-19 levels before the end of the year.
“With future savings targets identified and coal markets rebalancing in response to demand signals we are optimistic about achieving stronger outcomes through the second half,” Whitehaven Coal managing director and CEO Paul Flynn said in a public statement.