Coronado Global Resources faces inevitable sale as coal price slump forces asset disposal

A sale of Coronado or some of its coal mining assets appears inevitable.

A sale of all of Coronado Global Resources, or some of its assets, appears increasingly inevitable to industry experts, with recent efforts to get cash through the door only deferring its problems.

The company confirmed ahead of the weekend it had engaged in talks with certain counterparties about a potential sale of a minority interest in certain assets, but had not received any binding proposal from any party and had not made any decision as to whether it would proceed with a sale or any other form of transaction.

DataRoom reported that Coronado was believed to be in talks with an Indonesian mining group about a sale of assets or the business, with some pointing to BUMA as the likely candidate.

Another could be Indonesian conglomerate Sinar Mas, through subsidiary Golden Energy and Resources.

Earlier, the Australian-listed New Hope Coal was said to have made advances.

Market analysts say that the group’s options include selling a stake of its Curragh coal mine in Queensland to a steel producer such as Nippon, JSW or Mitsubishi, or selling all of the business or all of the Curragh mine to another coal miner.

Matt Latimore’s M Resources had recently on-sold a stake in Illawarra Metallurgical Coal to a steel producer at a price based on a premium coking coal price of $US250 ($382) a tonne.

The asset was purchased in 2024 from M Resources and GEAR for $US1.65bn.

BUMA has bid on Australian coal mine assets before and has been a contractor for another cash-strapped coal miner – Bowen Coking Coal.

Bowen shares remain suspended from ASX trading as it warned it would need to suspend operations at its Burton Mine amid a depressed coal price environment unless it secured immediate funds.

Operators argue Queensland coal mines have been hurt by costly royalty charges, which can be as large as 40 per cent of revenue.

They believe groups losing money should be excused from making the payments until they were back in profit-making territory.

BUMA agreed to buy Anglo American’s Dawson mine in Queensland for $US455m, and one possibility being floated is that it partners with Coronado’s 51 per cent private equity owner Energy and Minerals Group to privatise the business.

Coronado’s future continues to hang in the balance, with its market value at $201m and its share price at 13c after the coal price has fallen below a level where it can profitably mine coal from Curragh.

It has refinanced a $US150m asset-based loan with Oaktree Capital Management and had reached a deal with the Queensland government-owned coal-fired power station operator Stanwell, where Stanwell would provide $US150m upfront payment for 800,000 tonnes of thermal coal for five years from 2027.

But sources believe in about three months Coronado would be in a position where it was breaching its debt covenants on the Oaktree loan, paving the way for the opportunistic private equity fund to gain control over the group’s future.

They predicted that a sale of part or all of the business could be struck before that time that would provide leveraging for a refinancing transaction.

Parties have been buying some of Coronado’s $US400m worth of bonds trading at 70c in the dollar, including EMG itself.

DataRoom also reported that Czech group Sev.en had been hovering and may still be around.

EMG floated Coronado in 2018 with a $3.5bn market value and agreed to sell its holding to Sev.en last year, with Oaktree helping to finance the transaction.

But the deal collapsed when it refused to recut the terms due to the falling coal price, say market sources.

The Queensland Curragh mining complex, which mines thermal and metallurgical coal, is Coronado’s major source of income, but is struggling, with the metallurgical coal price down at about $US172.80 a tonne – it needs to be more than $US200 a tonne to be profitable.

Curragh also produces thermal coal, and the commodity price is trading at about $US106.60 a tonne.

The resources company is building underground mining operations at Curragh to extract coal at a lower cost.

The business was founded in 2011 and grew through a series of acquisitions in the US and Australia – including the purchase of the Curragh mine in 2017 for $700m.

Also hurting the industry is greater steel exports from China at a time that the Asian superpower is importing less coal.