Anglo American has halted mining activities at Moranbah North coking coal mine in central Queensland after an employee was killed in an accident on 26 March.
Moranbah North coal mine is a longwall mine with reserves amounting to 261 mnt of hard coking coal. This is one of the largest coal reserves in the world. A significant amount of coal from is mine is exported to India, Brazil and Europe from Hay Point Port.
Mining accidents are not new to this mine, as in last year the same was shut down between Feb-Jun’21 following the detection of gas leakage and creating supply disruptions. This, infact, made the company to lower down its coking coal production guidance from 18-20 mn t to 14-16 mn t in 2021 and the company’s production stood at 14.9 mnt down by 35% y-o-y basis.
Moranbah North coking coal mine’s production share in Anglo’s annual coking coal output stands at 20-22% as the same stood at 6.15 mn t in 2019 (normal year), 4.4 mn t in 2020 (Covid year) and 3 mnt in 2021 (gas-leakage accident year). Thus, looking at the past trend while it remains uncertain for how long will the operations be halted, the average per day production loss expected around 13,000 – 17,000 tonne (0.40 – 0.50 mn t per month). Australia’s coking coal exports stands at about 14 mn t per month.
Market particpants are of the opinion that the closure of mines is having limited impacted on the coking prices as the coal prices at present are already at unreasonable levels. The only impact that was seen, that prices that plunged by $131/t last week have stopped and have falling and has turned largely stable since Monday (28 March).
In case of India, two big steel producers, SAIL and RINL have highest exposure to Moranbah mines as these companies buy premium hard coking coal from the mine. Now amid closure, these companies have to look for alternates for procurement of coking coal.
Australian coking coal prices remain elevated
Australia is recieveing more-than-average rainfall since Sep’21 due to La Nina event causing flooding in mining regions and supply disruptions there.
Adding to the woes had been Russia-Ukraine conflict that had made Australian premium coking coal prices touch all-time high of $670/t, FoB basis.
While the prices have corrected (downward) since last week it still remains high at $545/t levels amid the ongoing geo-political tensions and supply disruptions due to rains.
Outlook
The impact of Mornabah coal mine closure, if not resumed in near-term, would be seen in the supplies of premium hard coking coal supplies and its prices. Adding to the woes would be supply disruptions due to rains and increased demand from European steel mills due to sanctions on Russia, thus supporting coking coal prices.
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