Part 1: Pure-Play Coal Miners
There are 32 ASX listed pure-play coal companies with 14 diversified miners who also mine or explore for coal. This article will give an overview of all of the companies with a market cap >$100m, focusing on the pure-play miners first and later in Part 2 analysing the diversified miners such as BHP and South32.
ASX listed coal miners are dominated by four big coal miners, with a handful of smaller miners and a larger number of highly speculative coal explorers making up the rest of the market. As you can see in the pie chart below, the big four ASX listed coal miners; Yancoal, Whitehaven, Coronado and New Hope; account for the vast majority of the market capitalisation of ASX pure-play coal miners. The total market capitalisation of ASX listed coal companies is $15.5 billion.
To put these companies in perspective, of the entire black coal mining market in Australia, Yancoal only accounts for 8.3% of the overall market and Whitehaven accounts for just 4% of coal mining market share in Australia. New Hope and Coronado are not even in the top 6 coal miners in Australia. This is because coal mining is dominated by large diversified coal miners such as BHP, Glencore and Anglo American.
Here is the list of all pure-play coal miners on the ASX. A few of these companies have very minor non-coal related interests. Despite this the vast majority of their earnings are derived from coal.
|Company||Countries Present In||Approximate Market Capitalisation|
|Yancoal Australia Limited||Australia||$4,710,000,000|
|Coronado Global Resources Inc||Australia and United States||$2,870,000,000|
|New Hope Corporation||Australia||$2,340,000,000|
|Stanmore Coal Limited||Australia||$278,000,000|
|Terracom Limited||Australia and Mongolia||$264,000,000|
|Bathurst Resources Limited||New Zealand (also Canada)||$217,600,000|
|Universal Coal Plc||South Africa||$165,000,000|
|Atrum Coal Limited||Canada||$160,000,000|
|Resource Generation Limited||South Africa||$116,000,000|
|MC Mining Limited||South Africa||$112,700,000|
|Aspire Mining Limited||Mongolia||$83,160,000|
|Prairie Mining Limited||Poland||$81,730,000|
|Resource Generation Limited||South Africa||$69,770,000|
|Tigers Realm Coal Limited||Russia||$64,500,000|
|Paringa Resources Limited||United States||$61,900,000|
|White Energy Company Limited||South Africa, United States and Australia||$49,000,000|
|Allegiance Coal Limited||Canada||$32,700,000|
|Australian Pacific Coal Limited||Australia||$28,700,000|
|Bounty Mining Limited||Australia||$28,300,000|
|Bowen Coal Limited||Australia||$25,000,000|
|Nucoal Resources Limited||Australia||$20,000,000|
|Intra Energy Corporation Limited||Tanzania and Malawi||$9,700,000|
|East Energy Resources Limited||Australia||$9,600,000|
|African Energy Limited||Botswana||$8,150,000|
|Pacific American Limited||Canada||$7,450,000|
|Ikwezi Mining Limited||South Africa||$4,000,000|
|Acacia Coal Limited||Australia||$4,000,000|
|Lustrum Minerals Limited||Australia||$1,400,000|
|County International Limited||United States||$1,100,000|
Yancoal Australia Limited (ASX: YAL)
Yancoal is the largest ASX listed coal miner. The company is also listed on the New York Stock Exchange, the Hong Kong Stock Exchange and the Shanghai Stock Exchange. Yancoal listed on the ASX in 2012 when it merged with Gloucester Coal Limited. They are also the largest pure-play coal miner in Australia.
Yancoal’s major shareholder is Yanzhou Coal Mining Company Limited, with 65.45% of issued shares. Yanzhou Coal operates nine coal mines in the People’s Republic of China, namely the Xinglongzhuang, Baodian, Nantun, Dongtan, Jining II, Jining III, Zhaolou, Tianchi and Wenyu coal mines. Yanzhou is majority owned by Yankuang Group, a Chinese state owned enterprise. Glencore Australia also owns 6.82% of Yancoal.
Yancoal operates five mines and manages five others. Yancoal has three tier one coal assets: Hunter Valley Operations, Mount Thorley Warkworth and Moolarben which accounted for 84% of Yancoal’s production in 2018. Hunter Valley Operations is a joint venture with Glencore Coal Assets Australia (Yancoal: 51%, Glencore: 49%). Yancoal’s other mines are Yarrabee and the Middlemount JV.
Yancoal manages Cameby Downs and Premier coal mines on behalf of major shareholder Yanzhou Coal Mining. The company also manages Ashton, Austar and Donaldson underground mines for Watagan Mining Company. In 2018 Yancoal’s gross saleable coal production was 50 million tonnes.
Yancoal mines predominately thermal coal, with 27.7 tonnes produced (attributable) in 2018. They only produced (attributable) 5.2 tonnes of metallurgical coal in 2018. Yancoal sells most of its coal to Japan, China, South Korea, Taiwan, Australia and Singapore.
Whitehaven Coal (ASX: WHC)
Whitehaven is the second largest ASX listed coal miner. Whitehaven listed on the ASX in 2007 when it sold 1.9 million shares for $1 each. It is Australia’s largest independent coal miner. Whitehaven was initially formed in 1999 to develop the Canyon open cut mine in the Gunnedah basin.
Whitehaven currently operates six coal mines in North West New South Wales: Maules Creek, Tarrwonga, Rocglen, Werris Creek, Sunnyside and Narrabri. All mines other than Narrabri are open cut mines. The company has also acquired the Winchester South Project in the Bowen Basin, Queensland. Whitehaven’s managed coal sales in 2018 were 10.3 million tonnes. The company primarily produces thermal coal but metallurgical coal production is predicted to increase as a proportion of overall production.Whitehaven sells most of its coal to Japan, Taiwan, Korea, Malaysia, India, Vietnam, Indonesia and the Philippines.
Coronado Global Resources Inc (ASX: CRN)
Coronado is Australia’s third largest ASX listed coal miner and the world’s fifth largest metallurgical coal producer. Coronado was admitted to the ASX in 2018.
The Coronado Prospectus states that:
“Coronado was founded in 2011 by Garold Spindler, James Campbell and a fund
affiliated with EMG, a management company for a series of specialised private
equity funds. Messrs Spindler and Campbell each have in excess of 30 years of
coal mining, processing and marketing experience. Coronado was founded with
the intention to evaluate, acquire and develop coal properties (pg. 11 Coronado Prospectus)
The initial proposed listing price per share was $4.00 to $4.80. The final price was closer to $4.00. On the first day of trading after the IPO, the share price immediately dropped to $3.60. Australian investors reportedly had little interest in the company, with most investors coming from the UK and Asia.
Coronado operates four mines, one in Australia and three in the United States. Coronado produced 20.2 million tonnes of coal in 2018. Coronado’s mines produce predominately metallurgical coal.
In Queensland, Coronado owns the Curragh mine complex in the Bowen Basin which it bought from Wesfarmers for $700 million. In Virginia and West Virginia, Coronado owns the Buchanan, Logan and Greenbrier mine complexes in the Central Appalachian region.
Coronado also has some planned development opportunities, including the MDL 162 development project which is adjacent to the Curragh mine. This could potentially result in an expansion of the Curragh mine.
New Hope Corporation (ASX: NHC)
New Hope is Australia’s fourth largest ASX listed coal miner and is Australia’s second largest independent coal miner. New Hope was admitted to the ASX in 2003 when it was spun out of Washington H. Soul Pattinson (ASX: SOL). Every Soul Pattinson shareholder received a fully franked special dividend in the form of one share in New Hope for every eight Soul Pattinson shares held. Soul Pattinson currently owns 51% of New Hope.
New Hope previously had a 40.83% interest in the Adaro mine and coal trading business located in Indonesia and a 50% interest in the Indonesia Bulk Terminal. It sold these assets for $US 406 million in June 2005.
New Hope operates three thermal coal mines in Queensland and New South Wales. For the six months ended 31 January 2019, New Hope produced 4.7 million tonnes of thermal coal. The New Acland mine, located north west of Oakey in the Darling Downs region of Queensland, produced 1.9 million tonnes of coal. Jeebropilly, near Amberly, Queensland produced 0.4 million tonnes while Bengalla in the Hunter Valley of New South Wales produced 2.4 million tonnes of coal. Final coal is expected to be recovered from the Jeebropilly mine by October 2019. New Hope also owns Queensland Bulk Handling, a 100% New Hope owned terminal at the Port of Brisbane.
New Hope also conducts exploration and development activities, predominately in Central Queensland.
New Hope purchased Bengalla from Wesfarmers, Rio Tinto and Mitsui over the course of 2015 – 2019. The company now has an 80% interest in the mine, with Taipower holding the remaining 20%. Bengalla is one of the lowest cost operators in New South Wales. New Hope is also seeking approval from the Queensland Government for the New Acland Stage 3 expansion of its New Acland mine.
New Hope sells most of its coal to Japan, Taiwan, Chile, India and Australia.
Stanmore was admitted to the ASX in late 2009 when 30 million shares were offered to the public at 20c a share. Stanmore was predominately a coal exploration company from its IPO until 2015. The character of the company changed considerably when in 2015 the Company acquired the Isaac Plains Coal mine in the Bowen Basin for $1 from Vale and Sumitomo.
Stanmore assumed all liabilities of the mine, including Rail haulage and port contracts; an accommodation services agreement; water supply and transportation arrangements; and power supply contracts. Importantly, Stanmore also became responsible for a $32 million rehabilitation obligation.
In exchange for releasing Sumitomo and Vale from these liabilities, Stanmore received compensation payments for the first twelve months.These payments covered fixed infrastructure charges and working capital payments up until first coal and ramp up of operations. As stated in Stanmore’s Half Year 2019 Financial Year Report:
“The Contingent Consideration relates to a royalty stream payable to the vendors of Isaac
Plains in the event that benchmark Hard Coking Coal prices are above an Australian Dollar equivalent of 160 (adjusted for CPI) and coal is produced and sold from either Isaac Plains or Isaac Plains East. Each royalty is capped at predetermined amounts for each vendor. Once the price threshold and production requirements are met, the royalty
is payable at $2 per product tonne (2015 dollars) to each of the two vendors of Isaac Plains. Royalties were paid during the H1 FY19 to the vendors and as a result the remaining cap is $36.175 million (2019 dollars).
Further, in 2018 Stanmore acquired the Wotonga deposit from Peabody Energy. As part of this acquisition Stanmore must to pay Peabody royalties if the coal price reaches $170 a tonne. From Stanmore’s Half Year 2019 Financial Year Report:
During H1Y F19, Stanmore completed the acquisition of Isaac Downs (formerly Wotonga South), from Peabody. This transaction included a royalty stream payable to Peabody at $1 per tonne of product coal when the premium hard coking coal benchmark is over A$170 per tonne (indexed for CPI) capped at $10.000m. The fair value of this royalty has been recognised during H1 FY19. “
Currently, Stanmore operates the Isaac Plains Coal Complex near Moranbah, Queensland. The complex includes the original Isaac Plains Mine and Isaac Plains East. Further expansion opportunities to the mine are available with the Isaac Downs Project and the Isaac Plains Underground Project. Stanmore predominately mines metallurgical coal.
Stanmore also holds a number of future development projects including The Range and Clifford in the Surat Basin near Wandoan, Queensland; and Belview, Lilydale, Mackenzie and Clifford near Emerald, Queensland in the Bowen Basin.
Here is a research report on the company for those who are interested.
Stanmore has a very experienced board and management team, with many members having held very senior roles within Glencore, Xstrata, Anglo Coal and Wesfarmers amongst others.
Stanmore sells most of its coal to Japan and Korea.
Terracom Limited (ASX: TER)
Terracom was admitted to the ASX in 2010 under its former name Guildford Coal. In 2015 Guildford Coal changed its name to Terracom Limited. Guildford was predominately an exploration company, with exploration permits in the South Gobi coal basin of Mongolia and the Bowen Basin, Maryborough Basin and the northern end of the Galilee Basin in Queensland, Australia.
Guildford produced its first coking coal from its Mongolian Baruun Noyon Uul (BNU) mine in 2014. The BNU mine sells its coal to Chinese steel mills. It produces 1.5 million tonnes of coal per annum and plans to increase production to 3 million tonnes per year.
In September 2016 Terracom announced that it had acquired the Blair Athol Coal Mine from the Rio Tinto managed Blair Athol Coal Joint Venture for $1. As part of the arrangement, the Joint Venture paid Terracom $80 million to meet the mines rehabilitation liability as determined by Queensland’s Department of Environment Heritage Protection in November 2015. The Blair Athol mine produces 2.9 million tonnes of thermal coal per year.
The acquisition included the mining lease, licences, contracts, all mining plant & equipment including a dragline, land,and infrastructure such as offices, workshops and stores.
In addition to the two operating mines, Terracom also has some exploration projects which can be developed into operating mines in the future. These include the Springsure Project, the Kolan Coal Project, the Sierra Coal Project, the Pentland Project, Clyde Park Coal and the Hughenden Project.
Bathurst Resources (ASX: BRL)
Bathurst Resources was admitted to the ASX in 2013 and the company is registered in New Zealand. Bathurst Resources is New Zealand’s leading coal producer. The company produces both metallurgical and thermal coal.
Bathurst Resources owns six coal mines throughout New Zealand namely the: Buller, Stockton (65%), Takitimu, Canterbury, Rotowaro (65%) and Maramurua (65%) mines. The company expects to produce 2.4 million tonnes of coal in 2019. Bathurst also has an interest in the Crown Mountain Project in British Columbia, Canada with fellow ASX listed coal miner Jameson Resources (ASX: JAL).
Universal Coal PLC (ASX: UNV)
Universal Coal is a South African coal mining company which first listed on the ASX in 2010. The company is also listed on the Johannesburg Stock Exchange. Universal has interests in three thermal coal mines, three thermal coal projects and one coking coal project: Kangala (70.5%), NCC Roodekop (49%) and Brakfontein (Ubuntu) (50.29%) thermal coal mines, the Eloff, Brakfontein, Arnot South thermal coal projects and the Berenice / Cygnus (Coking Coal) project (50% with option to increase to 74%).
The company has recently receive a non-binding indicative offer from Afrimat Limited (a company listed on the Johannesburg Stock Exchange) to acquire the company. At the time of writing the Directors are still considering the offer.
Atrum Coal Limited (ASX: ATU)
Atrum Coal was listed on the ASX in 2012. The company is an explorer and developer of coking coal assets in British Columbia, Canada. The companies two projects are the Elan Hard Coking Coal Project and the Groundhog Anthracite Project. Atrum is currently focusing on the Elan Hard Coking Coal Project. Atrum does own any operating mines.
The Groundhog Anthracite Deposit in British Columbia, Canada. It is the largest undeveloped anthracite deposit in the world with 1.57 billion tonnes of high grade anthracite.
Resource Generation Limited (ASX: RES)
Resource Generation Limited is a company developing a coal mine is South Africa. The company was listed on the ASX in 2003. The mine being developed, the Boikarabelo Coal Mine is located in South Africa’s Waterberg coalfield. Annual production from the mine is planned to be 6 million tonnes per annum.
The mine is anticipated to become a very low cost coal producer with a overburden:coal strip ratio of just 0.97:1. The coal seam to be mined is between 120 and 130 metres thick comprising thermal and soft coking coal of varying qualities.
MC Mining Limited (ASX: MCM)
MC Mining is a South Africa focused coal miner with two operating coal mines. The Vele coal mine has been on care and maintenance since 2013. The Uitkomst mine is currently the company’s only operating mine. MC Mining was formerly known as Coal of Africa Limited but changed its name in 2017. The company primarily produces hard coking coal.
MC Mining is currently developing the Makhado Project which is in the advanced stage. The company’s Greater Soutpansberg Project is also being developed but is in a less advanced stage.
As you can see, there are a wide variety of pure-play coal miners on the ASX. Please go to Part 2 of this series were I give an overview of the diversified coal miners.