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Coal slump hits Whitehaven and Yancoal hard

The impact of the slump in global thermal coal prices has become evident in the latest quarterly reports from major coal miners and exporters, Whitehaven (ASX:WHC) and Yancoal Australia (ASX:YAL).

Both companies released their latest figures on Thursday night and Friday morning. Yancoal reported its final quarter and its 2023 financial year results, while Whitehaven provided data for the December quarter and half-year performance.

Despite significant improvements in mine and port operations, both companies are facing a substantial decline in revenue and earnings for the six months ending on December 31.

Both miners reported higher production and sales after the La Nina weather phenomenon that affected late 2022 and early 2023 passed. However, the sharp decline in coal prices following the Russian invasion of Ukraine has resulted in significantly lower revenue and earnings.

In the December quarter, Whitehaven reported an annual coal price of $A216 per tonne, down 60% from $527 per tonne in December 2022. For the six months ending in December, Whitehaven’s average price was $A220 per tonne, a fraction of the $554 per tonne achieved in the same period in 2022.

Yancoal experienced a similar trend, with the average price for the December 2023 quarter at $A196 per tonne, less than half of the $A422 per tonne recorded for the same period in 2022. For the entire year of 2023, the company reported an average price of $A232 per tonne, down 38% from $A378 per tonne in 2022.

Whitehaven’s production showed mixed results, with a nearly 4% increase in its second-quarter run-of-mine production, driven by strong performance at its Maules Creek and Gunnedah open-cut mines in New South Wales. However, on a sequential basis, Whitehaven’s coal production for the quarter fell by nearly 6% compared to the September quarter. Nevertheless, production for the six months ending in December 2023 increased by a solid 17% compared to the first half of 2022, totaling 10.35 million tonnes. This, however, will not offset the impact of the price decline in the quarter and half-year.

Both companies are also closely watched for their upcoming acquisition deals. Whitehaven is set to finalize its acquisition of the Daunia and Blackwater mines from BHP and Mitsubishi for $US3.2 billion.

Yancoal reported a positive production story, with output from their mines improving for the fourth consecutive quarter, thanks to recovery initiatives across their operations. The company achieved almost 13 million tonnes of saleable coal production, marking their best quarterly achievement in the past three years. Run-of-mine production for the quarter reached 18.1 million tonnes.

For the entire year of 2023, Yancoal’s run-of-mine production increased by 19% to 60.2 million tonnes, while attributable run-of-mine production also rose by 19% to 45.5 million tonnes. Total saleable production increased by 12% to 43.6 million tonnes, with attributable sales rising by 14% to 33.4 million tonnes. However, similar to Whitehaven, the improved production figures will not fully compensate for the decline in coal prices.