Coal price recovery underway: Whitehaven
Whitehaven Coal says prices are on the way back up as Asia recovers, as activist resolutions fall flat at AGM.
Whitehaven Coal says coal prices are back on the way up as Asian economies recover from the coronavirus crisis, as almost 4 per cent of shareholders voting ahead of its annual meeting backed a resolution aimed at directing its board to prepare to wind the company up to protect the environment.
Activist group Market Forces proposed the motion for Whitehaven’s annual shareholder meeting on Thursday, asking the company disclose in future annual reports a plan that “demonstrates how the company will wind up its coal production assets and operations in a manner consistent with the climate goals of the Paris Agreement”.
Whitehaven’s board unanimously rejected both resolutions and the vast majority of the miner’s shareholders appeared to have followed suit, according to proxy votes cast at the meeting.
Almost 24.4 million shares were cast in favour of the resolution, or about 4 per cent of proxy shares voted ahead of the meeting. It was not put to a full shareholder poll as a previous motion calling for a change to Whitehaven’s constitution to allow advisory motions at future AGM’s only attracted the support of 2.8 million shares voted. With the activist shareholder motions falling flat, Whitehaven chairman Mark Vaile was bullish on the company’s outlook, telling shareholders the recent uptick in the thermal coal price, with the Newcastle benchmark price for coal lifting back above $US60/tonne, looked like the start of a “meaningful improvement” in pricing.
“The forward curve is also looking stronger, so it is likely a fundamental shift is occurring and a broad-based coal price recovery across both thermal and metallurgical markets is now under way,” he said.
Chief executive Paul Flynn told shareholders that, despite the hit to Whitehaven’s revenue from the coal price downturn, the company was in “prime position” to take advantage of returning demand from key customers.
“In the long term, with continued economic and population growth in Asia, there will be increasing demand for energy generation, infrastructure requirements and manufacturing and industrial output, as evidenced by forecasted GDP growth of the region. Southeast Asia, northeast Asia and India are all forecasted to return to strong GDP growth in the coming calendar year, and beyond,” he said.
“There is clear and growing demand for our quality-specific coals within the steelmaking, industrial and electricity generating sectors. Reflecting forecasted growth in the Asia region, both thermal coal and semi-soft coking coal seaborne prices are in turn forecasted to increase, reflecting the increase in industrial activity.
“This increase in industrial activity will require increased power generation and steel manufacturing. Of course, with COVID-19-driven policy stimulus initiatives emerging as governments around the world seek to reverse the recessionary impact of the pandemic, greater price upside may exist.”
Despite the more positive outlook, however, Mr Flynn told shareholders Whitehaven had completed negotiations with its lenders to ease covenants on its debts.
Whitehaven shares closed down 3c to $1.055 on Thursday.