Ann: 2021 First Half Financial Result Announcement, page-22

Nationals Senator for Queensland Matt Canavan is a sensible fellow and should, but for factional differences, be a Minister Federally.

I'm not sure I share his optimism re further new (or expanded) mines as it's become increasingly difficult to win State government approval, even though Queensland and NSW benefit hugely from rising coal prices because of the royalties tax miners pay:

(from 'The Australian' on Wednesday 29 September 2021):

"Nationals senator Matt Canavan says record coal prices will encourage Australian miners to kick-start the further expansion of the nation’s coal industry, particularly in Queensland’s thermal coal-rich Galilee basin.

The comments come as the price of thermal coal shipped out of Newcastle surged 12.8 per cent to a fresh record high of $US204.75 overnight on Tuesday, boosting the share price of ASX listed coal miners.

It means the price of thermal coal – used to generate electricity – has jumped more than 270 per cent since its 12-month low of $US54.70 last October, with supply currently failing to meet resurgent electricity generation demand caused by massive economic stimulus around the globe.

Coking coal, which has underpinned booming global steel production, has also hit record highs. Its last price of $US367.67 represents a 183 per cent lift on its yearly low.

The price jump contrasts with iron ore, which has crashed from $US200 a tonne in recent months to below $US100 a tonne last week.

Iron ore futures in Singapore on Tuesday slid 7.1 per cent to $US110.60 a tonne amid reports that more than 80 of China’s steel mills have suspended production for maintenance.

Surging coal prices have created a dilemma for value investors who have increasingly shunned coal-linked stocks as they respond to environmental demands. The rise also represents a boon for fund managers that stuck with coal, with many producers expected to start paying bumper dividends again after several lean years.

Senator Canavan told The Australian that although he thought prices would moderate with time, margins would remain strong enough to encourage coal miners to expand production.

“It’s unlikely prices will stay at these heights because prices at these amounts will encourage more supply,” he said.

“But I think this will encourage people to look at the expansion of coal mining. These large price increases seem to be the result of shortages of coal in a number of markets and that indicates that coal demand is very high and healthy, especially in the Asia-Pacific region.”

He added that he was confident higher prices would encourage miners “to look to the Galilee Basin and expand coal production there” alongside Adani’s controversial Carmichael coal mine.

“Demand for coal is increasing, and we have really good-quality coal,” he said.

“So, my view is that it will encourage increased supply like we’re seeing from the Galilee Basin from Adani. There are five other mines there under various stages of progress, there is expansion potentially of Adani, there is lots of potential for the coal industry in Australia.”

The global increase in coal prices has seen coal miner share prices make a comeback from recent lows caused by Covid and concerns about China’s unofficial ban on Australian coal imports. On Tuesday shares in Whitehaven Coal lifted 6.5 per cent to $3.27, a level not seen since November of 2019.

New Hope Corporation lifted 5.1 per cent to $2.46 while Yancoal Australia lifted 3.9 per cent to $2.66.

Yancoal CEO David Moult said the price lift was due to stimulus-led demand as well as supply constraints in Australia and Indonesia, and logistic disruptions in South Africa and Russia.

“Strong demand has also contributed to increasing prices, as economic stimulus packages continue to take effect in 2021 and underpin the demand for thermal coal,” he said..."