Australia’s New Hope to Ramp Up Coal Output, Sees Modest Insurance Premium Hikes
Australian miner New Hope Group’sCEO Rob Bishop said on Tuesday plans are progressing to double output over the next three years to meet an expected surge in demand for coal-fired power, after reporting a nearly 11% rise in fiscal 2023 profit.
New Hope is set to double production to around 14 million metric tons of coal by 2027 from 7 million this year after officials last month approved the expansion of its New Acland mine in the state of Queensland.
The miner resumed shipments to China in the latest quarter after rescinding an unofficial ban on Australian coal.
“Demand in China has increased substantially,” Bishop told Reuters.
“It’s quite scary in some respects, what electricity generation is going to be required, particularly with the world trying to decarbonize. People are starting to realize that renewables will take some time.”
The climate-related push to exclude thermal coal producers from financial services is softening in some areas like insurance as concerns around energy security rise to the fore, Bishop said, but finding some services can be difficult.
“The banking industry is still very much driven by reducing thermal coal exposure. We are challenged to get even bank guarantee facilities in place for rehabilitation lots,” he said.
Still, New Hope’s insurance premium increase this year has been modest.
“With energy security there is certainly the realization, particularly in Europe, that coal is going to be needed for some time and if you have got a customer there that is very good to insure from a claims history, then why would you turn away?”
“We are still investigating self-insurance options, but I think the urgency for us to do that has gone away.”
New Hope sold each tonne of coal for an average A$346.73 during the year, up from A$281.84 a year earlier.
The company posted a net profit attributable of A$1.09 billion ($701.52 million) for the year ended July 31 on Tuesday, compared with A$983 million in the previous year. New Hope’s financial calendar runs from July to July, and it reports results a month later than companies that follow the Australian financial year ending in June.
The coal miner declared a final dividend of 21 Australian cents per share and a special dividend of 9 cents per share.
Last year, it had a final dividend of 31 cents per share, and a special dividend of 25 cents per share. Shares rose as much as 2.8% to A$6.34, their highest since Jan. 25, following the results.
($1 = 1.5538 Australian dollars)
(Reporting by Navya Mittal in Bengaluru; editing by Shweta Agarwal, Subhranshu Sahu and Christian Schmollinger)
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