Coronado Coal shares drop on ASX listing

High profile coal IPO hasn’t found favour with investors in its first outing on the ASX.

FILE - In this May 22, 2014, file photo, sunlight reflects off of a chunk of coal at Dominion Terminal Associates' coal terminal in Newport News, Va. The Trump administration is considering using West Coast military bases or other federal properties as transit points for shipments of U.S. coal and natural gas to Asia. (AP Photo/Patrick Semansky, File)

Shares in Coronado Coal slumped after the company debuted on the ASX at midday.

At about 1.40pm (AEDT), shares in the company were trading at $3.50, firmly lower than the IPO price of $4.

Pricing was at the bottom of the range given in the company’s prospectus.

The listing follows an IPO which raised $774 million

Coronado, which was founded in 2011, is the largest coking coal producer in the United States. It produced 20.2 million tonnes of saleable coal in 2017.

The company owns four assets, including Curragh in Queensland and three metallurgical mines in the US, including Buchanan mine, the Logan and the Greenbrier mines in Virginia and West Virginia.

In October, the company said that private investment firm Energy & Minerals Group would remain a major shareholder through to February 2020 and would hold a near 80 per cent stake in the company after the IPO.

Local fund managers shunned the offering on the view that EMG was selling when coking coal prices were primed to fall on declining demand from China.

“I don’t think we can forecast the coking coal price, so it’s tough to buy something at peak earnings,” said Hugh Dive, chiefinvestment officer of Atlas Funds Management.