Fans of ASX coal shares might have woken up optimistic today. But any hopes of Thursday gains have since turned sour.
The market's leading coal producers are each trading deep in the red right now despite a deluge of outwardly impressive earnings. Here's how they're trading:
- Shares in Whitehaven Coal Ltd (ASX: WHC) are currently down 2.9% at $7.95
- Those in New Hope Corporation Limited (ASX: NHC) have dumped 4% to trade at $5.50
- Stock in Yancoal Australia Ltd (ASX: YAL) has fallen 2.6% to reach $5.62
And the NSW Government is likely behind at least some of their downturns.
Let's take a closer look at what seems to be going wrong for ASX coal shares on Thursday.
Right now, the S&P/ASX 200 Index (ASX: XJO) is up 0.8% while the All Ordinaries Index (ASX: XAO) has gained 0.83%.
ASX 200 energy giants post earnings
Let's start at the beginning.
Whitehaven kicked off the coal-related news today, posting its earnings for the first half of financial year 2023. The company posted $3.8 billion of revenue for the period and quadrupled its interim dividend to 32 cents per share.
That was followed by New Hope's quarterly activities report, released shortly after the market opened. It revealed it expects to deliver $1 billion of earnings before interest, tax, depreciation, and amortisation (EBITDA) for the first half but noted a slump in both coal production and sales.
ASX coal shares fall as companies respond to NSW policy
Come midday, however, other news was catching the market's attention.
The Yancoal share price tumbled after it warned investors to "exercise caution in dealing in [its] shares" after it received advice on the NSW Government's intended price cap and coal reservation policy.
The policy will be in effect from 1 April 2023 until 30 June 2024 and will see producers forced to put aside a portion of production to sell to domestic power generators. In Yancoal's case, that portion would be up to 395,000 tonnes of coal each quarter.
The coal put aside would then be subject to a price cap of $125 a tonne for 5,500 kilocalorie coal, energy adjusted. For comparison, Whitehaven achieved an average coal price of $553 a tonne last half.
Treasurer and Minister for Energy Matt Kean commented on the change, also announced by the government today, saying:
Where possible, coal mines will be required to provide power stations with the amount of coal they have supplied in the past, and export-focused mines will be required to provide additional coal needed to meet any difference.
Yancoal said the government confirmed producers won't be compensated for the difference between market rates and the capped price.
Though, it noted compensation may be available under some circumstances, such as if costs exceeded the capped price. The government says producers can apply for a higher price cap if the proposed cap doesn't cover costs.
Whitehaven also updated the market on the changes, saying it would be compelled to put the lower of 200,000 tonnes or 5% of each of its mines' expected saleable thermal coal production towards the scheme, unless volumes were under contract prior to 19 January.
New Hope also addressed the changes in its quarterly report, saying its 80% owned Bengalla operation won't be impacted by the price cap until the first quarter of 2024 due to existing contracts.
