New Hope Group is buoyed by the steadfast demand for coal in Asia, which the company says will sustain its assets going forward.
Despite the fact Newcastle coal futures hovered around $US150 ($206) per tonne at the time of writing, they topped $US260 per tonne in October, and according to New Hope, the immediate outlook remains strong.
“Consumption of the high-quality coal we produce is driving demand in our key markets. As the largest net importer of coal, China continues to have a material impact on the global seaborne trade market,” New Hope chief executive officer Reinhold Schmidt said at the company’s 2021 annual general meeting.
“Despite Japan continuing to explore alternative energy sources, the domestic recovery and limited availability of alternatives have fuelled higher demand for thermal power generation.”
As the global recovery kicked into gear and industrial activity increased, the demand for thermal coal in power generation and metallurgical coal in steelmaking skyrocketed.
New Hope sees demand for its coal product sustaining for at least the next two decades, with the commodity remaining the most accessible and affordable power-generation option for growth-minded parties.
According to Wood Mackenzie findings, New Hope stated that base case seaborne demand for coal would exceed its expected production levels from 2030 onwards, paving the way for greater competition for coal.
“As you can see in the graph, the base case seaborne demand exceeds probable and highly probable production from the early 2030s onwards. This demand curve is based on the current transition measures in place by governments across the world,” Schmidt said.
New Hope suggest that by 2041, base case seaborne demand for coal would exceed the company’s probable production capacity by almost 200 million tonnes.
Recognising the global push away from coal in a decarbonising world, the company reaffirmed the quality and lower-ash makeup of its product.
The ‘phase down’ might come but New Hope still has a large role to play until the crunch becomes unsustainable.
“Our operations produce high energy (high calorific value) coal which is lower in ash, sulphur and nitrogen, delivering superior coal quality outcomes, including low levels of nitrous oxide, carbon dioxide and sulphur emissions when compared to other coal products,” Schmidt said.
“This in turn helps to reduce the emissions intensity per unit of electricity generation. As a responsible operator, we prioritise our actions in response to the expectations of our stakeholders, including the communities in which we live and work, in order to create a positive and long-lasting sustainable legacy.”
New Hope stated its Bengalla coal mine in the Hunter Valley region of New South Wales continued to be the shining light for the company.
Following the completion of maintenance and upgrades, the company suggested the mine is set for continued growth going forward.
New Hope stated its New Acland coal mine in Queensland was moving towards an inevitable shutdown, with the company still awaiting approval for its stage three expansion project from the Queensland Government.