Miner New Hope Corp says a sudden drop in thermal coal prices and lower output from its Queensland operations will hurt its financial performance in the second half of the year.
“As a result of reduced electricity demand across most global markets, thermal coal demand and price has declined sharply since the beginning of April 2020,” it said in a quarterly update.
High levels of coal stocks in India, the uncertain pace of Japan’s recovery and low coal imports from Europe were all posing negatives for the thermal coal market, the miner said.
New Hope, however, said a pick-up in Chinese industrial activity and power consumption in recent weeks, along with firm demand from Vietnam, Taiwan and Korea had supported a recovery in prices.
New Hope also said it had been informed by the High Court that special leave applications had been submitted by Wiggins Island Coal Export Terminal (WICET) and liquidators regarding debts owed by its two units, Northern Energy Corporation and Colton Coal, which are under liquidation.
If the applications and appeal are successful, the company could be exposed to a liability of about $155 million, New Hope said.
A court last year found that New Hope was not required to fulfil its units’ debts, as claimed by Wiggins Island Coal Export Terminal (WICET) and the liquidators.