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Declining thermal coal returns in Queensland and NSW Hunter Valley confirmed

More confirmation of the sharp fall in returns from thermal coal mining and exports in Queensland, especially in the NSW Hunter Valley, emerged with New Hope Corp (ASX:NHC), the 40% owned associate of Washington H Soul Pattinson, informing the ASX on Monday that net earnings for the six months to January fell by 59%.

That included a 26.5% slide in January quarter earnings as well.

In both cases, New Hope blamed the slide in thermal coal prices from a year ago as the boom from the Russian invasion of Ukraine two years ago and then the wet weather in 2021 and 2022 in the coal fields faded.

Underlying EBITDA for the three months to January was $179.9 million for the quarter, while the underlying EBITDA for the six months to the end of the same month was down 59.1% from the $1.038.5 billion earned in the January 2022 half-year.

A 29.4% jump in saleable coal production to 4.1 million tonnes for the January 2024 half helped offset the price slide and followed the end of the big wet and La Nina period.

Saleable coal produced of 2.0 million tonnes for the quarter was in line with the previous quarter. New Hope said the average realized sales price for the January 2024 quarter fell 15% to $180.64 a tonne from $211.40 per tonne in the October 2023 quarter.

But the best comparison for the latest quarter was against the same quarter in 2023 when the average price received by the company was more than $357 a tonne, making the slide over the year close to 50%.

New Hope said the Newcastle thermal coal price – the gC NEWC index average for the quarter was $US132.41 a tonne down 10.6% from the previous quarter index price of $US148.05 a ton and down a massive 64.2% from the dame quarter a year earlier.

“A mild winter in the Northern Hemisphere has resulted in soft demand, placing downward pressure on coal prices.

“High energy products have seen greater demand destruction compared to the API-5 price, which has remained stable due to strong Chinese demand for lower energy coal supply. API-5 has created a floor for the gC NEWC and the expectation is that prices will stabilize at current levels,” the company said.

“Bengalla Mine (80% owned in the Upper Hunter Valley) has the capability to alternate production between gC NEWC and API-5 with relative ease, and we continue to optimize production and sales based on the margin rank determined from the changing pricing indices.”

The company releases its half-year financial results and accounts next month.