Whitehaven Coal Thrives Amid Rising Coal Demand

Industry News

& Articles

Whitehaven Coal Thrives Amid Rising Coal Demand

Facebooktwitterlinkedin
  • Beijing backflips on October 2020 coal ban, unloads up to 1 million tonnes of Australian coal
  • Whitehaven FY21 Net Loss After Tax (NLAT) of A $543.9
  • Whitehaven share price up 92.61 per cent from June lows of A $1.25 per share

Real and lasting change hardly ever happens overnight. In the case of the still-unfolding global effort to decarbonise fossil fuels industries, real and lasting change is expected to involve a hard pivot towards greener, more renewable forms of energy. This is a hard-fought struggle that sees its beginnings with governments having to accept the hard truths of the climate crisis, but also from trade tensions sparked between Beijing and Canberra from as early as 2018.

Escalating trade tensions between Australia and China became more pronounced with Australia banning Huawei from developing its 5G network in 2018. Since then, trade disagreements have seen China imposing restrictions on a number of Australian exports — with Australian coal being among the latest facing restrictions at the end of 2020. While mounting trade tensions were seen to be the primary reason for Beijing’s dismissal of Australian coal, the decision was also seen as moving in line with China’s efforts to decarbonise its steelmaking industry.

However, recent reports have seen Beijing backflipping on its coal ban, in the face of a looming domestic power shortage ahead of the coming winter. Australian cargo loads of coal, stranded outside Chinese ports since late 2020 have been seen to berth and unload their stock — with a near 1 million tonnes of coal known to be discharged so far. The unofficial end to Beijing's ban on Australian coal has seen astronomical price surges in the spot price of coal, from lows of US $71.80 in April to US $232.65 on 4 October. Unsurprisingly, desperate times call for quick action, and an energy-scarce China is not picky when it comes to accepting the Australian coal that’s been waiting at its shores.

A Sudden Reversal of Huge Demand, with Massive Spillover Effects

China’s consumption of coal accounted for 58 per cent of the world’s total coal consumption in 2019. The sudden ban on Australian coal imports would no doubt have produced drastic effects upon the coal industry — producing a likewise effect as its ports now begin to unload Australian coal. Spill-on effects from China’s coal ban in 2020 have not only affected its domestic energy production, but have also seen a drop in coal supplies in India, which has been known to purchase onsold coal from China. Resultantly, investors may find it an opportune moment to reassess their expectations of Australian coal producers such as Whitehaven Coal Limited.

Whitehaven reported FY21 results with earnings before interest, tax, depreciation, and amortisation of A $204.5 million, and a NLAT of A $543.9 million. The company attributes its NLAT to decreased realised prices of the coal it produced during this reporting period, as well as decreased production within its Narrabri facility.

Part of its focus to reduce debt, manage its capital and deliver shareholder returns for FY22 sees the company seeking to optimise the productivity of its Maules Creek fleet, and output of its Narrabri facility. However, the recent spike in spot coal will certainly factor into Whitehaven’s profit outlook for the coming year. At the time of writing, the company’s share price is up 242.42 per cent over the past year.

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC – Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

Comment on this company

Latest Stories

Service Stream Makes Key Lendlease Acquisition

Transformational acquisition of Len……

Bluescope Steel Upgrades FY22 Earnings Guidance To Over $2 billion

Bluescope Steel (ASX:BSL) build……

BHP AGM all about positioning for the future

BHP is a world leader in processing minera……

More for you

CIMIC Group Spends Big On Public Infrastructure

CIMIC Group, formerly Leig……

Rio Tinto To Move On Decarbonization; Spending Big On The Green Push

Rio Tinto Limited is enga……

Super Retail Group Increases Inventory Ahead Of Lockdowns Easing

Super Retail Group (‘……

IDP Education Sees Strong Market Recovery Ahead

Technology innovation and d……

Brickworks Lays Solid Performance Ahead of Pandemic Recovery

Brickworks Limited (ASX:…..

Kogan.com Announces September Results, Soars Past $300 Million Sales

Kogan.com is a portfolio of r……

KOSEC Terms & Conditions

Kodari Securities Pty Ltd (CAR 399556) trading as KOSEC is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC is a financial services company and any information provided by its platforms, portals, reports and documents is protected by copyright. Any unauthorised production of this information is prohibited.
KOSEC reserves the right to change or remove any information provided on our website, reports or any documents including these terms and conditions at any time without notice. The change or modification to the terms and conditions will be effective immediately upon posting an updated version on our website, necessary platforms and documents. It is recommended that you review the information provided on our website, including these terms and conditions frequently for any changes.

Disclaimer
KOSEC provides general advice only. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. KOSEC recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Please make sure you read our Financial Services Guide (FSG).

KOSEC does not guarantee any returns. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance). Investing in the stock market can incur huge losses. Please also be aware that fees will incur on every transaction regardless of the performance of your investments or returns generated. Employees and or associates of KOSEC may hold one or more of the stocks, securities or investments reviewed by the company.

Your use of information from our website, reports, documents and from talking to our representatives/associates is at your risk. Under no circumstance should the investment be based solely on KOSEC information and general advice. You should seek professional financial planning advice.
KOSEC aims to maintain the accuracy of the data and information provided on this website, by using information prepared from a wide variety of sources, which KOSEC to the best of its knowledge and belief, considers accurate and does not make any representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability, suitability or availability of the information provided.

We may at times refer to third parties, which the details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. KOSEC has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

Fees
As a client you will be charged a yearly service fee and a set brokerage fee per transaction. Your service fee will automatically renew at the end of your agreed 12 month period at the same rate advertised at the time. Your credit card or bank account will be charged for a further year following which will again auto renew until you cancel your yearly service fee. You can cancel the auto renewal at any time in advance of the renewal date by contacting us. KOSEC is aware of the need to ensure the security of your credit card details and our payment systems are compliant with the Payment Card Industry (PCI) Data Security Standard.

Privacy
You consent to receiving email correspondence from KOSEC, as well as companies KOSEC has an association with. These emails will be sent by KOSEC and third party companies. You can opt out of receiving any category of emails at any time by contacting us. We may from time to time inform you of special offers, or even ask your opinion of the services we provide, but your involvement is optional. Should you request us to do so, we will archive your details.

Indemnity and Liability
You indemnify KOSEC from all claims or threatened claims, suits, demands, damages, costs as well as including legal costs incurred in dealing with any threatened claim, expenses made by any person or corporation against KOSEC and any other amounts which is caused by KOSEC providing information, execution and General Advice.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from a decision made by you on the basis of information obtained through the use of our portal, reports, documents or any General Advice given and any transaction taken place.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from delays in executing orders for the client and acknowledges KOSEC makes no guarantees about the time taken to execute an order on behalf of the client. You acknowledge that KOSEC relies on third parties in providing technology and release KOSEC from any harm, loss or damage you may suffer as a result of the failure of such information technology.

Cookies and Links
KOSEC website, and its portal uses cookies, which lets us identify your browser while you are using the site or our portal. Cookies do not identify you personally. They simply allow us to track your usage patterns. If you prefer not to receive cookies, you can configure your browser to reject them or to notify you when they are being used. The functionality of the KOSEC website may be impacted if you restrict the use of cookies.

Fill up the form below and we will get back to you as soon as possible.

CLAIM YOUR FREE E-BOOK &
7 DAY ACCESS TO LOTUS BLUE

STOCK MARKET SUCCESS

KOSEC’s CEO, Michael Kodari’s new book, “Stock Market Success” valued at $39.95, available at Dymocks book stores with all the proceeds going to Dymocks Children’s Charities.

CLAIM YOUR FREE E-BOOK WHEN YOU LOGIN TO LOTUS BLUE INVESTMENT PORTAL

Latest TV Commercial