Anglo coal mine fire has prices running er\u2026 hotter
\nFastmarkets steel markets expert Paul Lim says the closure could delay the planned sale of Anglo\u2019s coal division, but world class assets will still attract buyers
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Mining is an upside-down world, which is why news that is so obviously bad can be good from another person\u2019s perspective.<\/p>\n
The Grosvenor mine fire which shut Anglo American\u2019s newest coal development on Saturday \u2013 expected to result in a months long closure \u2013 was manna from heaven for its competitors.<\/p>\n
Not least will be BHP (ASX:BHP)<\/strong><\/a>, which argued it\u2019d do a better job running Anglo\u2019s assets before walking off as the target pushed for progressively more generous terms in a two month long takeover struggle.<\/p>\n (BHP, of course had three deaths in 12 months from early 2023 to 2024 across its sprawling Australian portfolio, so its safety record is up in the air right now.)<\/p>\n There has so far, thankfully, been no injuries at Grosvenor. The mine was already likely to see reduced output in the second half on account of a longwall move and was expected to deliver 2.3Mt in the first half and 3.5Mt of Anglo\u2019s total 15-17Mt steelmaking coal output in 2024.<\/p>\n Analysts at Jefferies reckon it\u2019s about 30% of the value of the ~US$4.5b portfolio.<\/p>\n But Anglo\u2019s defence plan against the BHP bid had been to sell off the coking coal mines to raise cash for investing in its flagship Tier-1 copper assets.<\/p>\n Those coal assets could now come cheaper, if someone is willing to bet on them with regulatory and safety concerns to consider.<\/p>\n The biggest winners here are BHP and its fellow Queensland met coal miners: Whitehaven Coal (ASX:WHC)<\/strong><\/a>, Coronado Global Resources (ASX:CRN)<\/strong><\/a> and Stanmore Coal (ASX:SMR)<\/strong><\/a>.<\/p>\n Stanmore itself had to announce the closure of the Mavis underground mine on Friday, which doesn\u2019t have the mine life to support reinvestment at current prices.<\/p>\n But after months in the doldrums, impacted by waning sentiment in Chinese and global steel markets, the Grosvenor disruption has met coal markets surging again, up 9% in Singapore on Monday to US$254\/t.<\/p>\n That surge has Anglo\u2019s peers humming, with Whitehaven hitting a roughly 18 month high yesterday, just months after acquiring BHP\u2019s Blackwater and Daunia mines and becoming a majority met coal miner by revenue.<\/p>\n \u00a0<\/p>\n Anglo American is reportedly well stocked for July deliveries and is yet to declare Force Majeure with any of its customers, but the futures move gives a hint that traders are expecting shortages as August and September contracts are drawn.<\/p>\n Fastmarkets regional editor, steel and ferroalloys, Paul Lim, said the biggest impact would be felt by customers in India, who have few long-term contracts.<\/p>\n If Japanese, Korean and Taiwanese customers saw a shortfall they could also put higher bids into the spot market from August.<\/p>\n \u201cSome of the Indian mills do not have term contracts for Australian coals. Secondly, it will be the JKT mills \u2013 Japan, Korea and Taiwan,\u201d Lim told Stockhead<\/em>.<\/p>\n \u201cSome of them don\u2019t take sanctioned cargoes, like Russian, so they depend on Mongolian (and) they depend a lot on Australian coals especially as Australian coals are also very near to them, so it\u2019s a good supply chain for them.<\/p>\n \u201cThey may see supply shortfalls out of JKT, and when that happens you may see JKT becoming more active buying in the spot market, which is why traders are also looking to cover more August positions.\u201d<\/p>\n While the fire is likely to delay the sale, Lim believes the world class nature of Anglo\u2019s portfolio means it will attract interest regardless. Anglo\u2019s ~16Mtpa Bowen Basin suite includes the 88% owned Moranbah North and Grosvenor underground operations, plus Capcoal, Aquila and Dawson.<\/p>\n In a world where few new coal mines are being approved, it\u2019s one of the few opportunities to secure premium hard coking coal supplies, despite the persistent methane issues.<\/p>\n \u201cIt will certainly delay their plans a little bit, especially if Anglo is not able to confirm how much output Grosvenor can eventually supply, or the kind of checks that the Queensland government has to do on the coal mine before they attempt to sell it again,\u201d Lim suggested.<\/p>\n \u201cHowever, Moranbah North and Grosvenor are world class assets, so there will still be interest for these assets. It\u2019s just a matter of time on when the sales can proceed.<\/p>\n \u201cI already know that there are very big companies out there looking to acquire these assets, and a fire will certainly delay but it\u2019s not going to make it much less attractive, I feel.\u201d<\/p>\n The Anglo supply concerns sent Whitehaven shares to a roughly 18 month high of $8.56 yesterday, with Coronado also up 12.5% over the past two days. BHP shares were largely unchanged while Anglo was down 2.4% on Monday in London.<\/p>\n Scroll or swipe to reveal table. Click headings to sort.<\/em>\n<\/p>\n CODE COMPANY PRICE WEEK RETURN % MONTH RETURN % 6 MONTH RETURN % YEAR RETURN % MARKET CAP NAE New Age Exploration 0.0035 17% -13% -42% -30% $ 6,278,646.19 CKA Cokal Ltd 0.096 4% -4% -17% -20% $ 101,421,204.12 BCB Bowen Coal Limited 0.056 6% -14% -43% -64% $ 168,032,324.38 SVG Savannah Goldfields 0.019 -5% -32% -62% -81% $ 5,340,613.40 GRX Greenx Metals Ltd 0.875 -2% -3% -9% -22% $ 244,038,403.00 AKM Aspire Mining Ltd 0.35 -4% 63% 218% 400% $ 177,672,944.75 AVM Advance Metals Ltd 0.026 13% 8% -29% -80% $ 3,926,960.85 YAL Yancoal Aust Ltd 7.02 12% 9% 35% 53% $ 9,137,440,904.04 NHC New Hope Corporation 5.17 8% 4% -3% 7% $ 4,311,210,866.40 TIG Tigers Realm Coal 0.003 0% -25% -40% -40% $ 39,200,107.10 SMR Stanmore Resources 3.68 5% 12% -9% 43% $ 3,353,176,878.48 WHC Whitehaven Coal 8.59 12% 7% 11% 28% $ 6,801,564,373.92 BRL Bathurst Res Ltd. 0.8 -2% -5% -17% -18% $ 155,001,421.80 CRN Coronado Global Res 1.34 12% 20% -24% -13% $ 2,162,625,311.70 JAL Jameson Resources 0.04 8% 29% 29% -32% $ 17,606,308.39 TER Terracom Ltd 0.23 15% 10% -47% -45% $ 184,222,234.05 ATU Atrum Coal Ltd 0.004526 0% 0% 0% 0% $ 11,966,853.96 MCM Mc Mining Ltd 0.135 -10% -13% -10% 4% $ 55,891,802.12 DBI Dalrymple Bay 3.04 4% 10% 12% 15% $ 1,477,369,767.66 AQC Auspaccoal Ltd 0.071 1% -8% -32% -44% $ 43,771,675.77 <\/p>\nNo force majeure<\/h2>\n
ASX coal stocks<\/h2>\n