Morning trading November 16, page-150

AHQ



Coal miner banks on change in fortune

Thermal coal prices ticked up yesterday after a month of declines, brought about among other things by a milder than expected start to the northern winter and better than anticipated gas supplies in Europe.

They remain extraordinarily high, with Trading Economics assessing Newcastle coal above US$330/t yesterday, enough for our Aussie coal execs to buy themselves a yacht or two.

Coking coal futures had been catching up to their thermal cousin, closing what was once an unusual US$150/t plus arbitrage which saw energy coal traded far higher than the traditionally premium hard coking coal market.
There were few winners in the coal market over the past week, with prices generally trending down and sideways, though still at ultra high levels.

Meanwhile, something a little different at the small end of town. Allegiance Coal (ASX:AHQ) has fallen 86% year to date after running into operational trouble at its operations in the United States.

Many of its issues, particularly at the New Elk mine in Colorado, have been down to labour availability.

It thinks there could be a light at the end of the tunnel there. It hopes the overhaul of a continuous miner at the underground coal seam could deliver a return to benchmark expectations at the under-producing mine.

AHQ is hopeful recent changes to the labour market and the exit of the mine’s general manager and superintendent by mutual agreement, could deliver a change in fortune.

“Two underground coal mines have recently closed down in neighbouring New Mexico and Utah from which we are targeting to recruit available mine workers. We have also entered into supply arrangements with labour hire companies to recruit workers,” the company said in an operational update yesterday.

“We have set up a shift roster with a view to engaging workers on a 7-day on and 7-day off cycle to allow them to work at the mine but also to remain living at home, a roster structure preferred by many.

“In addition to the above, with a change in leadership we have had some workers who had left return to the mine to work and we are hopeful we will see more return.”