Plunging coal price hit billionaire Chris Wallin’s QCoal profits

While profits are down and his industry is hit by a China coal ban, Chris Wallin had a court victory over Adani this year that will pay him more than $40m

Falling coal prices have hit Chris Wallin’s personal wealth. Picture: Jeff Camden

Falling coal prices have put a big dent in the profits — and potentially the fortune — of one of Australia’s biggest private coal miners, Chris Wallin.

The financial results of the Queensland billionaire’s QCoal took a large hit in the 2020 financial year, according to documents just lodged with the corporate regulator.

Despite an increase in revenue, which reached $429m for the year, QCoal’s net profit fell about 28 per cent to $86m as the cost of exporting its coal increased by about $100m for the year.

Another one of the companies in Wallin’s empire suffered a similar fate. Profit for Northern Hub (Drake) Pty Ltd slumped 80 per cent to $13m.

It was a similar story for another of the coal baron billionaires on The List — Australia’s Richest 250, Sam Chong. His Jellinbah Group, which he owns with Japan’s Marubeni Coal and multinational Anglo American, saw its annual profit fall about 36 per cent to $442m. “This result was largely driven by deteriorating coal prices,” Jellinbah said.

Australian coal companies have been hit hard this year and the news has not improved in recent weeks as a combination of price pressure and a ban on Australian coal by China has the industry under immense pressure.

Metallurgical coal recently fell below $US100 per tonne for the first time since mid-2016, putting pressure on many higher cost Australian metallurgical producers.

QCoal’s assets include the $1.7bn Byerwen Coal Mine and the nearby Drake open-cut hard coking and thermal coal mine, and a year ago there was optimism about 2020 being the first full year of coal shipments from Byerwen and a boost that would come from the completion of a second coal handling and processing plant that would “further enhance production and output volumes”.

But this year’s accounts show a big increase in expenses and the drawing down of funds from the debt facility the company has with ANZ during the financial year.

It was not all bad news for QCoal though. It was part of court action taken against Indian mining giant Adani over its Abbot Point coal terminal, which in August led to the Queensland Supreme Court ordering Adani to pay more than $100m in damages to four coal companies over what was termed “unconscionable conduct” in the judgment.

Adani was alleged to have unfairly increased user and handling charges at the north Queensland terminal. According to its 2020 financial report, QCoal said it had negotiated a payment plan with Adani for the $40.8m it is owed under the judgment. It has so far received two tranches totalling $22.8m. Adani has appealed.

QCoal’s financial report also confirms that Wallin has taken ownership of the assets of the Cook Colliery and other assets previously owned by the ASX-­listed Bounty Mining.

The Courier-Mail recently reported Wallin had spent almost $100m on the assets after he had previously agreed to stump up $60m in cash and a $30m facility to help Bounty pay down debts and access working capital. But he later pulled the pin on the deal and Bounty fell into administration and then liquidation.

Despite that experience, Wallin still owns shares in a string of other ASX-listed miners.

He is the largest shareholder in Venus Metals, a gold explorer that has the Youanmi gold project in WA, as well as associated vanadium and lithium projects. Venus shares are up about 20 per cent since the beginning of 2020.

Wallin owns shares in oil and gas explorer Central Petroleum, which is the largest onshore gas producer in the Northern Territory. Its shares are down slightly since January 1 but have almost doubled in value since the market hit a low in mid-March.

Carawine Resources has also performed well for Wallin, rising almost 50 per cent during the year. The gold and base metals explorer last Friday announced the acquisition of Phantom Resources had been completed, giving Carawine interest in four exploration licence applications in the Tropicana region of Western Australia.

Another gold-related stock in Wallin’s portfolio is Strategic Minerals, which is exploring the Woolgar Gold holding in Queensland. Wallin’s QGold held 89 per cent of the stock and moved to take over the rest of the company and privatise it in a process that was finalised in October.