Our export business

Snapshot - EBITDA* $67.4M

The Stockton export coking coal mine continued to benefit from strong export prices in FY19, with export pricing at an average hard coking coal price of USD $204.56.

The long-term relationships acquired as part of the BT Mining acquisition have continued, with new key customer relationships being developed in the Asia and Pacific region; the majority of FY20 sales are already contracted.

To reduce our export sale price exposure, we forward contract USD foreign exchange rates and coal pricing.

Demand underpinned by diversity

Our export coal is characterised by several unique, distinctive, and valuable properties. It has very low ash content, very low phosphorus, and it’s almost all vitrinite – making it an ideal blend improver in steelmaking.

In addition, we market it on a ‘value-in-use’ basis to maximise both the sales price and value to customers.

For us, our exports remain firmly underpinned by the key principle of diversity. We benefit from geographically diverse markets, customers, industries, end products, pricing structures – which all helps to reduce business risk.

Current market and outlook

Coking coal prices have softened over the course of the year, falling below the USD $150 per tonne threshold. This is largely attributed to domestic policies in China, the world’s top consumer and importer of coal and iron ore, and largest manufacturer of steel. Even though we don’t sell into the Chinese market directly, the global pricing is impacted by these policy changes.

The expectation is that China's government will continue to implement policies that restrict coal imports. This expectation is subject to substantial uncertainty, with the expected extent of a Chinese economic slowdown and respondent government stimulatory measures assumed to add considerable volatility to the price in the shorter term.

Looking ahead

The outlook for average spot prices of hard coking coal is a gradual recovery over FY20. India is expected to be the key source of import growth; combined with growing demand from emerging Asian economies and high-cost supply exiting the market, these are predicted to offset the gradual easing of demand from China.

These positive indicators are expected to be partially dampened by increased exports from Australia and Russia which are impacting the seaborne market supply. Australia’s dominance of this market means weather, logistics, and other disruptions in Queensland could also potentially drive intermittent price spikes.

“With a great product, our export strategy is also underpinned by diversity – in geography, customers, industries, end products, and pricing – which all helps us to spread our risk.”

*EBITDA noted above for Stockton is Bathurst’s 65 percent equity share.