Whitehaven Coal, Australia’s biggest pure-play coal miner, is facing an investor push to return billions of dollars to shareholders just as it suspends its share buyback to preserve cash for a potential tilt at BHP’s mines.
The turmoil unleashed by rolling sanctions on Russia following its invasion of Ukraine, which sent global energy prices soaring, has filled Whitehaven’s coffers over the past financial year. The miner on Thursday reported a record $2.66 billion profit for the 12 months to June 30, providing its shareholders with a 42¢ fully franked final dividend that will take its full-year payout to 74¢ a share.
Thermal coal, primarily used to generate power and heat, made up 94 per cent of Whitehaven’s sales over the year at an average price of $445 per tonne.Credit: AP
A $2.65 billion pile of cash on the balance sheet is spurring chief executive Paul Flynn to pursue his long-term goal of growing the miner’s exposure to coking coal, a key ingredient in steelmaking, despite a campaign by London hedge fund Bell Rock to return the cash to shareholders.
“We’ve stated very clearly along the way that our growth would be targeting more metallurgical coal in our mix as we try and build the proportion of our revenue that’s generated from that segment of the market,” Flynn said.
The coal miner paid out $948.9 million to buy back shares over the year, but the program was “temporarily on hold ... whilst these other processes run their course,” Flynn said.
Shares in the company fell 4 per cent on Thursday to close at $6.92 on news the buyback was suspended.
‘The notion of Whitehaven continuing to grow ... [is] understood by shareholders who’ve been there for any length of time.’
Whitehaven CEO Paul Flynn
Thermal coal, primarily used to generate power and heat, made up 94 per cent of the miner’s sales over the year at an average price of $445 per tonne, compared to $325 a tonne the previous year.
Activist investor group Market Forces also jumped on the wagon opposing the growth ambitions, supporting 128 shareholders for a resolution at the company’s October annual general meeting calling for a capital return. Market Forces wants to undermine expansion of, what it calls “second rate,” coking coal mines.
Flynn declined to say if Whitehaven would make a bid for BHP’s assets, but acknowledged the Daunia and Blackwater mines fit within the company’s “strategic crosshairs,” its long-term goal to grow its exposure to coking coal.
Bell Rock has surveyed shareholders to garner support for its campaign, but Flynn said the miner’s own investor engagements showed support for growth.
“We have recently conducted a perception survey which was very useful,” Flynn said. “There is a diversity of views, but there’s strong support for us to continue to grow.”
“The notion of Whitehaven continuing to grow has been something that’s been well understood by shareholders who’ve been there for any length of time.”
Whitehaven is considered a front-runner for BHP’s multibillion dollar assets, which Australia’s largest miner is offloading as it repositions its portfolio away from fossil fuels towards what it terms “future-facing” commodities such as copper and nickel.
Other Australian coal producers have also seen huge jumps in revenue as countries around the world turn away from Russian coal.
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