Sinking coal prices spell hard times

Photo / NZPA
Photo / NZPA

Specialist hard-coking coal prices around the world bode ill for the likes of debt-laden Solid Energy and litigation-bound Bathurst Resources, and their respective West Coast operations.

Since 2011, hard-coking coal has plunged in price from US$290 ($367) a tonne to about US$140.

Similarly, lower grade thermal coal (on Newcastle prices) for energy generation has gone from US$121 a tonne to about US$94.

Hard-coking prices in 2008 were 60 per cent higher at US$350, a period when Solid Energy was investigating speculative fossil fuel alternatives, and were still about US$330 in 2011.

However, Solid Energy was plunged into crisis in March because of the declining global coal price, shedding hundreds of staff and revealing about $390 million in debt, while Bathurst is fighting in the courts over consent challenges.

Research by Craigs Investment Partners has highlighted market instability. "With prices below US$140 a tonne the consequences for the coking coal industry could be quite severe," the research said.

Craigs broker Peter McIntyre said: "If coal prices get much lower, I'd be surprised if many of the high production-cost operators can keep going." Otago Daily Times

- Otago Daily Times

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