Hunter miners making big cash profits as prices triple in a year despite China ban and climate concerns

The climate change impact on coal can be seen in some of the big write-offs of coal company asset values.

Port Waratah Coal Service's August operating statistics show exports through its two Newcastle terminals are up by 11 per cent for the year to date, despite climate change pressure and the Chinese ban on Australian coal.

Prices have tripled since they bottomed in August last year, a recovery that was not anticipated by either climate or financial analysts.

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Miners are making big cash profits but facing potential funding shortages as banks shy away from the coal industry because of shareholder pressure.

The latest edition of the Australian Coal Report has the index price for high-quality Newcastle coal at $US171.20 ($229.20) a tonne, with reported sales as high as $US175.42 ($235.20).

The high in 2008 was just over $US180.

With most mines reporting cash costs of between $60 and $80 a tonne in domestic currency, industry profit margins appear to be back at the levels that led to the Rudd government's failed attempt at a "super-profits" tax back in 2012.

Whitehaven, which owns the Maules Creek mine, reported unit costs earlier this year of $70 a tonne.

Australian Coal Report said Whitehaven recently wrote down the value of its assets by about $650 million, while predicting strong coal prices through to 2023.

BHP gave various reasons, including "forecast markets for thermal coal", for its asset write-downs.

"According to reports, BHP has put a negative value of $US275 million on its NSW coal assets that include Mt Arthur and its 28 per cent stake in Newcastle Coal Infrastructure Group, the operator for the NCIG terminal in Newcastle," Australian Coal Report said.

"This means BHP will effectively pay a buyer to take over its NSW coal assets, (although) any potential deal may include some liabilities related to mine rehabilitation."

The price rises have also seen high-ash coal that previously went to China rocket in value, from $US38 ($51) a tonne to $US101 ($135), in recent trading.'

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About 85 per cent of Newcastle exports are of thermal coal for power stations, with the remaining 15 per cent or so being "semi-soft" coking coal used for blending in steelworks.

Because power stations and steel plants are separate markets, their pricing is effectively independent.

Coking coals have traditionally sold for more than thermal coals, with "semi-soft" coking in the middle.

The price inversion has seen nominally "semi-soft" coal sold into higher priced thermal markets, which Australian Coal Report says will lead to "a predictable reduction in (semi-soft) exports".

PWCS's monthly export reports do not break their shipments into coal types, but its August figures showed it had shipped 75.8 million tonnes, up on 58.4 million tonnes at the same time last year. At least some of this increase has been attributed to extra tonnage switched to PWCS from NCIG while it repaired a storm-damaged shiploader, one of two at its Kooragang loader.

Commodites tracking firms say Australia has made up for the Chinese coal ban by selling more to India, Japan, South Korea and Taiwan. They note China is importing more coal from Russia, which is boosting production and upgrading railroads to its export ports.

China's Global Times reported last month that the Chinese government's limits on steel exports would have a noticeable impact on Australian iron ore exports, 60 per cent of which went to China. It would also "likely lead to a steel shortage for the recovering Australian economy".

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