Bowen Coking Coal faces cash crunch, with 500 jobs at risk

Bowen Coking Coal remains locked in talks with its financiers to stave off a liquidity crisis that could mean the loss of 500 jobs at its flagship Queensland mine.

Bowen Coking Coal chairman Nick Jorss.

Bowen Coking Coal remains locked in talks with its financiers to stave off a liquidity crunch that could mean the loss of 500 jobs at its flagship Queensland mine.

Its shares gyrated on Monday after it resumed trading on the ASX following a three-week suspension sparked by growing concerns about its finances due to depressed coal prices and increased royalty payments to the Queensland government. They fell as much as 21 per cent before regaining ground in the afternoon to close 4.2 per cent higher at 10 cents.

The company said it remained engaged with multiple parties to secure financing during a period of “depressed coal prices and ongoing royalty pressures”.

Bowen Coking Coal’s position may change due to the success or failure of financing arrangements, if coal prices remain at the current depressed levels and if it cannot achieve a royalty deferral from the Queensland Revenue Office. The compnay presently maintains $47.2 million of cash and cash equivalents.

“The company is taking active steps to address its liquidity, which include undertaking a review of the scale of its operations in light of the present low commodity price environment,” the company said. Bowen Coking said it will reduce production at the Burton Mine Complex, west of Mackay, and take over operating the mine to cut costs.

“This decision has not been taken lightly, but is essential for Bowen to conserve cash reserves, allowing time to navigate the current depression in the coal price cycle,” the company said.

Bowen Coking said it had appointed advisers as it seeks to refinance its balance sheet and provide it with capital funding, extended debt terms and balance sheet strength.

“These discussions and plans are continuing,” it said. “While there is no guarantee of securing refinancing arrangements at current coal prices, Bowen continues to explore potential debt, equity and hybrid solutions, to maintain adequate liquidity for the business.”

Bowen Coking Coal’s Burton flagship mine.

The company said coal prices were being curtailed by continued uncertainty in global trade flows stemming from US tariff policies and geopolitical events.

China’s persistent steel oversupply, driven by decreasing domestic demand, had led to a flood of low-cost exports on the global market. “This surge in Chinese steel exports is exerting significant downward pressure on global steel prices and on metallurgical coal prices consequently,” it said.

Bowen Coking Coal chairman Nick Jorss has warned of a wave of coalmine closures due to the deteriorating market conditions and if a crippling state royalty regime was not wound back. Bowen closed its Bluff mine near Blackwater in December 2023 due to rising costs.

Mr Jorss said Bowen Coking was not alone in its financial predicament following the introduction of a bruising coal royalty scheme introduced in 2022 by the previous Labor government. Burton opened the same year with a projected 10-year life and annual production of two million tonnes of coal. But the combination of falling coal prices and “the world’s highest royalty rates” means it may have to be temporarily closed. Mr Jorss said the company has so far paid $120m in royalties without even turning a profit, a situation that was not sustainable.

Separately, a troubled NSW coalmine run by Brisbane-based Australian Pacific Coal joint venture has plunged into receivership and administration after failing to resolve funding issues.

Dartbrook Mine, an underground thermal coal joint venture in the Hunter Valley, had sat empty since 2006 before it was revived at the end of last year.

The group has appointed Richard Hughes and Timothy Heenan from Deloitte as voluntary administrators of Dartbrook Operations, the subsidiary in which the APC operates the mine through a joint venture with Tetra Resources.

Originally published as Bowen Coking Coal faces cash crunch, with 500 jobs at risk