Lower coal prices hurt Peabody's profit but the coal mining giant expects demand to riseOct 22 - EMBIN (Emerging Markets Business Information News)
The world's biggest coal company, Peabody Energy , lost $US135 million through lower coal prices over the past year. The company's third quarter revenues were $US1.72 billion compared with $US1.8 billion in the previous year primarily on lower realised pricing in Australia . Peabody took over Queensland's Macarthur Coal in 2011. Australian revenues decreased 4 per cent as higher volumes partly offset a 13 per cent reduction in revenues per tonne. Australian sales totalled 10 million tons, including 4.6 million tons of metallurgical coal and 3.4 million tons of seaborne thermal coal. Adjusted EBITDA of $US216.3 million reflected ongoing cost and productivity improvements that mitigated the impact of approximately $US135 million from lower pricing. The company also said another 20 million tonnes of global metallurgical coal production had yet to be cut from the market despite a savage year of closures, job losses and cutbacks. But amid the gloom of its annual results, Peabody revealed the huge gains to be made in India and said it had reduced its Australian costs to $US70 a tonne. “While global coal markets continue to reflect oversupply and concerns over Chinese coal imports, we are seeing some favourable industry indicators,†the company said. “India is transitioning to become the fastest-growing coal importer. “China's coal imports have declined in recent months, reflecting coal import policy uncertainty, stable domestic supply, flat pig iron production and modest coal generation growth of 1 per cent through August. “India's coal generation rose 13 per cent through the first nine months, and demand for thermal coal imports accelerated by more than 55 per cent in September to a new monthly record. “Metallurgical coal imports rose 23 per cent through September as India continues to access the high-quality seaborne market. Coal quality concerns, domestic production shortages and strong demand support further coal import growth; and Global seaborne coal markets remain challenged, yet supply growth is set to moderate as production cuts are implemented. Based on current global economic growth forecasts, Peabody expects annual global coal demand to rise 550 million tonnes by 2016. Over this same period, approximately 250 gigawatts of new coal-fuelled generation is expected to be built. Seaborne metallurgical coal demand is projected to increase over time, led by ongoing urbanisation and industrialisation in China and India . With solid operating performance to date, the company now targets total 2014 Australian sales of 36 to 38 million tons, including 16 to 17 million tons of metallurgical coal and 12 to 13 million tons of export thermal coal.
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