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Whitehaven Coal (WHC) Update Oct14th.2021

 

This is not a recommendation or proposal to do anything. The data written in this article is not guarranteed. It is my private personal opinion. I own a position of Whitehaven Coal shares that`s why I`m not independing.  

Whitehaven operates 5 coal mines in New South Wales and Queensland, Australia. 

Chances & Risks

The record coal prices 232$ for thermal coal and 412$ for met. coal (oct13, 21) makes WHC extremly profitable. As the biggest quantities are contracted the actual prices will become visible in the following quarters. It is expected that WHC will pay a juicy dividend for the first half of 21/22. The share price might increase if coal prices will remain on the current level. The Chinese lifted the ban on Australian coal and importing what they can get. The ongoing recovery of the Indian and other asian economies will keep coal prices high for the foreseeable future. Aurizon forecasts the continued growth of Australia’s coal sector to 2030. "We have reasonably good insights into coal demand whether that be thermal coal used for energy or metallurgical coal used for steel making,” Lippiatt said. 

As the coal demand in Asia seems to remain stable for the years to come - most coal power plants in Asia have an age <20 years - capex spend on coal projects is low in the countries producing seaborne coal - a supply gap for seaborne coal seems to be very likely in the comming years.    

A risk for WHC are shareholder resolutions against the business purpose of the company by green minded institutional investors betraying their clients. The last ones got 40% of the vote and thus might intimidate the management see below. 


 Production

Maules Creek produces high-CV thermal coal and semi-soft coking coal

Narrabri produces high-CV thermal coal and PCI coal

Tarrawonga produces high-CV thermal coal and semi-soft coking coal

Werris Creek produces thermal coal and PCI coal (10)





 Reserves


Growth Projects

Maules Creek            13Mtpa ROM  >35 years • Mine ramping up to 16Mtpa ROM with the roll out of AHS, commencement of in-pit dumping and 16Mtpa modification application

Narrabri Stage 3        11Mtpa ROM >25 years • Extends mine life to 2045 

Tarrawonga               3.0Mtpa ROM ~10 years • Ramp up production to 3.0Mtpa ROM

Vickery Seeking      10Mtpa  ROM >20 years • Open pit metallurgical and thermal coal production • On site coal handling preparation plant • Rail from site. Approved with 4.5mio tons/yr August 12, 2020. It got a federal nod Sept. 21. 

Winchester South ~ 15Mtpa ROM >25 years • Whitehaven’s expansion into the Bowen Basin • Open pit metallurgical and thermal coal production, 

WHC fiscal year is from July 1st - June 30th 

Share Price 27.08.2021: 3.23 AUD/share  about 2.39 USD.


The accounted loss for FY21 is caused by 650 M AuD or 474 M USD impairment charges for its mines.  


Number of Shares: 1,032,644,232 Outstanding: 996,545,000      


Approximately 57% of Whitehaven’s thermal coal book in the September quarter was priced in prior periods. Realised coal prices reflecting prior periods occurs due to a number of reasons. Approximately 22% of thermal coal sales were priced sub gC NEWC 6000 CV pricing structures, almost exclusively the higher ash Narrabri coal.


Customers in  1000 AUD 2019/2018 Comparison Revenue by geographic location 

Most of the coal from WHC is sold to East Asian countries. The biggest growth potential is India.

Tax Situation: 

Australien verzichtet auf die Erhebung der Quellensteuer, sofern die Dividenden aus Gewinnen bezahlt werden, die bei der australischen Gesellschaft voll besteuert worden sind (franked dividends) oder es sich um die Ausschüttung von so genanntem „conduit foreign income“ handelt. Andere Dividenden werden weiterhin mit 30 % besteuert, wobei die Quellensteuer aufgrund des DBA, je nachdem, auf 15 %, 5 % oder 0 % herabgesetzt wird. 

Some News

2021/10/12 Due to extreme low coal inventories in China China lifted the sanctions on Australian coal. (12)

2021/09/16 Whitehaven Vickery extension gets Federal nod

2021/04/15 ROM production guidance for the 2021 fiscal year fell from 21.4-22 million to 20.6-21.4 million tonnes. The updated unit cost guidance rose by 5 per cent from $69-72 to $73-75. (8)

2020/10/20 “In China, the arbitrage between domestic and import prices remain above $US25 ($35) per tonne, supporting the demand for imported coal and it is unclear if China will relax its custom clearance times and allow for further imports" (6). I assume that China limited imports to support its own coal industry.  

2020/10/15 Whitehaven Coal has paused three key development projects, including the Narrabri and Vickery extension projects in New South Wales and the Winchester South metallurgical coal project in Queensland(6). 

2020/10/12 China bans Australian coal imports as relations sour. China has suspended purchases of Australian coal. Chinese power stations and steel mills have been verbally told to immediately stop using Australian coal, and ports also have been told not to offload Australian coal, according to the report (5).

2020 05 The New South Wales Government has given Whitehaven Coal the all-clear to extend the Vickery coal mine in New South Wales (2).

Climate Related Shareholder Resolutions Sept. 03.2020

Someone would expect that investors holding shares of coal mines, oil companies believe in a modern future based on such energies. Someone who believe in acid rain, "climate change" or other green dogma will not buy or have such shares. In the 70ies green NGO bought a few shares of nuclear operators and forwarded petitions that were regularly very clearly rejected. 

Today there is the phenomen that shareholders of energy companies forward shareholder petitions against the business purpose of the company in favor of the green dogma of "climate change". These petitions getting more and more and getting more and more votes. 

I assume that these petitions and votes are usually supported by institutional investors. That means investor that invest other poeples money. The managers of these funds are proud of their green believe. Instead of living acc. to their dogma avoid motor vehicles, ac, heating, electricity, air travel, computers, they live their believe on the costs of their customers. Many of the final beneficiaries of pension funds don`t have a choice others most probably does not know what these managers are doing with their money. According to my opinion it is betrayal of the customers. 

https://www.abc.net.au/news/2020-08-13/shareholder-fossil-fuel-resolution-whitehaven-coal/12546830

 

 

 

 

Some References

12. Oct. 12th, 2021 https://www.australianmining.com.au/news/china-forced-to-ease-coal-power-restrictions/

11. Sept. 16, 2021 https://www.australianmining.com.au/news/whitehavens-vickery-extension-gets-federal-nod/

10.  August 29th, 2021 Sarah McNally
Investor Relations

Whitehaven Coal Limited
Level 28, 259 George St, Sydney NSW 2000 Australia
Tel: +61 2 8222 1155  Mobile: +61 477 999 238
Email: SMcNally@whitehavencoal.com.au www.whitehavencoal.com.au 

9. August 5, 2021 https://www.australianmining.com.au/news/winchester-south-on-track-for-whitehaven/

8. April 15, 2021 https://www.australianmining.com.au/news/whitehaven-set-back-in-the-pack-for-2021/

7. Oct. 20, 2020 https://www.australianmining.com.au/news/yancoal-scales-back-spending-to-weather-unpredictable-coal-storm/

6, Oct. 15, 20https://www.australianmining.com.au/news/yancoal-scales-back-spending-to-weather-unpredictable-coal-storm/20 https://www.australianmining.com.au/news/whitehaven-to-delay-key-projects-amid-coal-slump/

5. Oct. 12, 2020  https://seekingalpha.com/news/3621421-china-bans-australian-coal-imports-relations-sour-bloomberg?utm_medium=email&utm_source=seeking_alpha&mail_subject=rio-china-bans-australian-coal-imports-as-relations-sour-bloomberg&utm_campaign=rta-stock-news&utm_content=link-3

4. Aug. 3rd, 2020 http://marketbeat.com/URL/?URL=https://www.afr.com/companies/mining/glencore-to-cut-australian-coal-production-20200802-p55hot

3. July 14, 2020 https://www.australianmining.com.au/news/whitehaven-optimises-nsw-operations-amid-global-slowdown/

2. May 21st 2020 https://www.australianmining.com.au/news/whitehaven-clears-vickery-expansion-hurdle/

1. April 2nd 2020 http://marketbeat.com/URL/?URL=https://steelguru.com/coal/glencore-and-tohoku-settle-thermal-coal-price/557765

 

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