Coronado Global Resources aiming for growth as BHP and Teck look to sell coal assets

Coronado Global Resources has dialled back its dividend payout to preserve cash for acquisitions.

Coronado Global Resources boss Gerry Spindler says the company is “enthusiastic” about the number of coking coal mines on the market, as it considers bids for assets owned by BHP and Teck.

Coronado delivered a record annual net profit of $US771m on Wednesday, but declared only a modest US0.5c a share dividend – down from US11.9c a year ago – with Mr Spindler telling analysts the company had dialled back its payout to shareholders to bolster its balance sheet as coking coal assets come onto the market.

Last week, Canada’s biggest coal miner, Teck Resources, said it planned to spin-out or sell its coking coal business and keep its focus on copper and other base metals. On Tuesday, BHP confirmed it will sell its Daunia and Blackwater coking coal mines in Queensland, narrowing its own focus to its best quality assets.

Blackwater sits only a stone’s throw from Coronado’s Curragh coal complex, and Mr Spindler told The Australian the company – which was linked last year to mergers with Peabody Energy and Arch Resources – was on the hunt for growth opportunities.

“There are a few things that make us enthusiastic about participating in M&A or assets in the marketplace. We have a broad range of operating capabilities – we operate underground long wall mines, we operate underground room and pillar mines and we operate in very large surface mines,” he said.

“We’ve got a history of making acquisitions, and improving the acquisitions we make. And the third point is the fact that we operate in a variety of jurisdictions and have operating abilities in both Australia and the US.”

But Coronado chief financial officer Gerhard Ziems told analysts the coal royalty hike introduced by the Queensland government would play a factor in any decision made by the company, saying its assessment of BHP’s mines would be affected by the additional royalty payments.

“We haven’t seen the prices yet, but everyone has got a net present calculation and off those things go into that,” he said.

Coronado finished 2022 in a $US92.1m net cash position after generating $US3.58bn in revenue and booking adjusted earnings before interest, tax, depreciation and amortisation of $US1.22bn.

Coking coal prices have surged back above $US350 a tonne in the wake of a major train derailment in Queensland, and as Chinese steel makers return to the market for Australian coking coal.

While warning the company would not pay “crazy” prices, Mr Spindler said Coronado was more than comfortable it had the financial firepower available to buy additional assets if they fit with the company’s strategic direction.

But last year’s dalliance with a merger with thermal coal miners Arch and Peabody appears to be over now coking coal prices are now back trading above energy coal, with incoming chief executive Douglas Thompson – who will take charge of Coronado after the company’s annual shareholder meeting in May – telling analysts the company would only consider buying metallurgical coal mines.

Coronado’s accounts show the company is not only at odds with the Queensland government over royalty rates, it is also disputing an $94.3m bill received in September from the Queensland state revenue office over stamp duty on its March 2018 acquisition of the Curragh mine from Wesfarmers.

The company said it had lodged an objection to the assessment and was awaiting the outcome of the dispute process.

Coronado shares closed down 15c, or 6.8 per cent, at $1.98.