Australian coal miner New Hope looks for acquisitions

24 Mar 2015


Diversified Australian energy company New Hope Corp Ltd, which is sitting on a hefty cash pile of over $1.1 billion, is looking for acquisition of cheap coal assets, despite growing concerns of environmental pollution and global warming.

''Market conditions for Australian coal producers are challenging at present; however, New Hope has efficient operations and is in a robust financial position, so we are well placed to see out the current downturn and take advantage of these conditions to grow the business for the future,'' New Hope's managing director Shane Stephen said.

In its half yearly results released today, the Queensland-based miner reported a net loss of $23 million, which includes a $58.5 million impairment charge on its oil and gas assets. However, without non-regular items, the net profit was 51 per cent higher compared to last year at $34 million.

''We are also actively pursuing asset-level acquisition opportunities, with a focus on either adding additional near-term coal production capacity, or complementing our existing portfolio of longer-term development projects.''

''We would look at metallurgical coal,'' Stephen said.

New Hope produces around 6 million tonnes of thermal coal annually with more than 90 per cent of the production going to export markets.

Thermal coal is used by power plants whereas higher quality metallurgical coal is primarily used by steel plants.

The bulk of its coal production comes from New Acland mine, which is projected to be exhausted in 2017. The company is actively pursuing securing approval for the New Acland continuation plan.

In December 2014, New Hope acquired Cockatoo Coal Ltd's 51-per cent stake in three coal projects in Queensland's northern Surat Basin.

"Coal prices are cyclical. It is times like this that differentiate the operators. We take a long-term view. There are growth opportunities for coal in non-OECD countries."

China, the biggest consumer of Australian coal, has indicated that it plans to reduce coal usage to control air pollution raising concerns among Australian coal exporters.

"China is pursuing domestic coal reform. There was significant over-investment in 2010-11, which will take time to clear. Coal will remain part of the energy mix in China, alongside renewable and gas," Stephen said.

Even though China's coal imports declined 6.3 per cent in 2014, imports from Australia rose 6 million tonnes.

"High-energy, good quality coals will still be in demand. There will still be growth opportunities," he said.

New Hope said that the short term outlook for global coal markets remain challenging, although positive signs are beginning to appear in some markets.

In its guidance for the full year 2015, the company expects to achieve coal sales of 5.8 million tonnes, slightly lower than last year's 6 million and said that it realised prices are also expected to be lower although it will be partially offset by a weaker Australian dollar.

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