Anglo American (LON: AAL) halted
on Friday production in parts of its Moranbah North coking coal mine in Queensland,
Australia, after a roof collapsed.
The diversified miner said
no one was injured in the accident, which happened during a planned longwall
move. It noted the incident was triggered by a geotechnical issue.
Coking coal markets have been particularly sensitive to supply disruptions over the past four years, and the Moranbah North outage comes as the Australian sector readies for cyclone season, when operations are often forced to close because of harsh weather conditions.
Coking coal markets have been sensitive to supply disruptions over the past four years, and the Moranbah North outage comes as the Australian sector readies for cyclone season.
Analysts at Jefferies said while it
was too early to say how long the mine, located in the Bowen basin would be
offline, the impact could be significant.
“If we assume the mine is down for
the year, this would be a ~$350m Consolidated EBITDA hit for Anglo’s 2020E
results, equating to ~3.5% on our price deck and ~3% on spot prices,” they
wrote.
The investment bank noted that hard
coking coal prices would have to average $20 per tonne
higher than its current forecast of $155 per tonne for
Anglo to make up the volumes via pricing.
Moranbah North has produced more
than 6 million tonnes of coking coal in each of the past two years, accounting
for roughly 3% of Australia’s exports of the steelmaking material.
Anglo American, which has
consistently been offloading coal operations since 2014, recently its
2021 thermal coal target to 26 million tonnes from a previous goal of as much
as 30 million tonnes.
The diversified miner has also cut its 2020 metallurgical coal production outlook to 21-23 metric tonnes (Mt) from 22-24 Mt, though that commodity appear to be one of Anglo’s key pillars of growth moving forward.