Coal price rise a $770m Australian bonus for Peabody [IMG] Dump...

Coal price rise a $770m Australian bonus for Peabody


Dump trucks at one of bankrupt Peabody’s US coalmines.

• The Australian
• 12:00AM January 11, 2017
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• Matt Chambers
  
  Resources reporter
  Melbourne
  @mattchambers1
  

Increased coal prices have bankrupt US miner Peabody Energy expecting a $US562 million ($767m) Australian windfall from its previously loss-making mines.
But this has not been enough to save the Burton coalmine in Queensland, which was quietly put on care and maintenance last month.
St Louis-based Peabody, whose huge US domestic mines make it the world’s biggest private-sector coal company, has released updated earnings forecasts for the next five years showing healthy earnings from its Australian mines, which were previously expected to lose money in 2016.
Peabody said the company’s thermal and coking coalmines in Queensland and NSW were expected to deliver $US225m of earnings before interest, tax, depreciation, amortisation and restructuring costs in 2016.
This is up from predictions of a $US20m loss made in August, when Peabody delivered plans to relist after debt and low prices forced it into Chapter 11 bankruptcy protection in April.
For 2017, Peabody expects EBITDA of $US325m from its Australian operations. This is up from August expectations of just $US9m profit and now has Australia contributing more than a third of its total earnings. Coking coal prices rose 180 per cent last year, peaking at $US308 a tonne in November, and thermal coal was up 80 per cent. But coking coal prices have fallen dramatically since the start of the year and last traded at $US201.
Despite the extra earnings, Peabody has confirmed the Burton mine in Queensland, which was its highest-cost Australian mine, has closed.
“The transition of the Burton mine in Queensland’s Bowen Basin into a care, maintenance and rehabilitation phase (was completed) in December 2016 following successful completion of the Thiess contractor mining contract,” a Peabody spokesman said yesterday.
In 2014, Peabody halved production from the mine to about 1.2 million tonnes per year. Peabody referred questions on job losses, which had previously been reported as up to 250, to contractor Thiess, whose owner CIMIC refused to comment.
While expecting to ride a coal bonanza for the next two years, Peabody has left earnings forecasts for 2018 to 2021 largely unchanged, reflecting industry views that recent surges in coal prices are due to short-term factors and will not be sustained.
The forecasts were released with Peabody’s plan-of-reorganisation statement filed on December 22 with the US Bankruptcy Court and released to the New York Stock Exchange.
The company is planning to raise $US1.5bn in equity and emerge from bankruptcy in the second quarter of this year.
“While we still have outstanding issues to resolve prior to emergence, this plan demonstrates that Peabody retains an unmatched asset base, leading US platform, substantial Australian thermal and metallurgical coal business, and a team of skilled employees with a fundamental commitment to lasting values,” Peabody chief executive Glenn Kellow said.

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