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Argus Media: Peabody to reopen Metropolitan coal mine

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World Coal,

US energy firm, Peabody Energy, will reopen its 1.8 million tpy Metropolitan metallurgical coal mine in Australia's Illawarra region of New South Wales (NSW) in May after it was closed in early January because export orders dried up, Argus Media has reported.

The firm had planned to reopen the mine by the end of February. But China's continuing import ban on Australian coal has made it difficult to find new markets for hard coking coal that had been sold to domestic steel producer BlueScope's nearby Port Kembla steelworks. Workers are due to return to the mine this week, with longwall production resuming this quarter and rising to full production during July – September.

Peabody cut a third of the Metropolitan workforce in June to try to align its production levels with lower coal demand because of the impact of COVID-19 pandemic. This followed similar negotiations at the firm's 2.5 million tpy Wambo thermal coal and semi-soft coking coal underground mine in the Hunter valley region of NSW.

Peabody sold its Millennium and Mavis Downs coking coal mines in April to MetRes, a joint venture between Australian coal mining firm, Stanmore Coal, and Australian trading firm, M Resources Trading.

Argus last assessed the premium hard low-volatile coking coal price at US$107.15/t fob Australia on 30 April, down from US$157.25/t in early February. Argus assessed the non-premium hard mid-volatile coking coal price at US$106.75/t fob Australia and the pulverised coal injection (PCI) grade low-volatile price at US$108.05/t compared with US$131.25/t and US$95.85/t respectively in early February.

The parity pricing between Australian hard coking coal and PCI grade coal is because of Chinese customers that are banned from buying Australian coal paying premiums for Russian coal at a time when supplies of PCI coal are tight.

Peabody expects its seaborne metallurgical coal exports to increase in 2021 compared with 2020, although this is dependent on a continued increase in customer demand.

Metropolitan produced 1.4 million t of coking coal in 2019, down from 1.7 million t in 2018 and 2 milion t in 2016. Peabody prior to the COVID-19 pandemic had been looking for ways to boost its metallurgical coal sales, after it was forced to close its Goonyella North mine in Queensland because of a fire in September 2018.

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