Demand for coal ‘to last for decades’, says Whitehaven chair Mark Vaile
Whitehaven Coal chairman Mark Vaile says demand for high quality thermal coal will continue for ‘decades’ even as the world moves to a net zero carbon position.
Whitehaven Coal chairman Mark Vaile says demand for high quality thermal coal will continue for “decades” even as the world moves to a net zero carbon position.
“The challenge of addressing climate change is incredibly complex and changes to global energy trends will occur over decades, not years,” Mr Vaile, a former minister in the Howard government and one-time leader of the National Party said in Whitehaven’s annual report.
“In a more carbon-conscious world that will need more energy to support growth, we see a role for high quality coal being used in tandem with advanced generation technology to deliver improved emissions outcomes,” Mr Vaile said.
He said the miner’s perspective on the continuing demand for high-quality coal in Asia “underpins the investment thesis behind our growth projects”.
His comments follow increasing pressure on the long-term dynamics of the coal market, with China last week declaring it will stop funding coal-fired power projects around the world. This is expected to flow through funding provided by China’s state-owned banks.
Whitehaven operates four mines in the Gunnedah coal basin of NSW and has two mines under development: Vickery, near Gunnedah, and Winchester South, in Queensland’s Bowen Basin.
The company, which ranks as one of the biggest listed pure play coal miners on the ASX, employs around 2500 people.
Vickery and Winchester South will see Whitehaven’s portfolio weighted more strongly to the demand for coking coal in South and South-East Asia.
Meanwhile, Mr Vaile said demand for coal has continued to intensify following a strong pick-up in the June half.
While Whitehaven suspended its dividend last financial year, Mr Vaile said a return to historic highs in coal prices “foreshadow a return to dividend-paying status in the near future”.
Whitehaven last month released its full-year accounts showing it had plunged to a $543.9m statutory net loss after wiping $650m from the value of its Australian coal mines.
The writedown came about as Whitehaven shifted its focus towards mining higher quality coal.
The coal miner booked earnings before interest, tax, depreciation and amortisation of $204.5m.
Higher quality coal has come into demand as older coal generators, built to burn lower-quality coal, begin to drop out of international grids, and regulators insisted on lower-emission coal-fired power stations.
Writing in the annual report, Whitehaven CEO Paul Flynn said the focus of the miner was on maintaining solid production performance and optimising the coal offering “to make the most of the incredibly strong seaborne coal price environment”.
“This will ensure we can achieve our goal of retiring debt in the near term and returning value to shareholders,” he said.
Separately, Whitehaven’s annual report revealed Mr Flynn had a total remuneration package of $3.45m last financial year, including a near $1m short-term bonus. This was up from a total package of $2.96m a year earlier.
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