By Jo Clarke

January 21, 2023 - Australian resources firm BHP expects to come in at the bottom end of its 58mn-64mn t production guidance for its BHP Mitsubishi Alliance (BMA) coking coal joint venture in the 2022-23 financial year to 30 June.

Wet weather has disrupted Queensland's coal operations, particularly in the past week when flooding in the Mackay region caused port closures. The firm also warned that a longwall move at its 5mn t/yr Broadmeadow mine would be brought forward to the April-June quarter, further weighing down its production for the financial year.

BMA produced 27.23mn t on a 100pc basis in July-December 2022, up from 26.03mn t in the same period of 2021. This leaves it with a target of 31mn t for January-June to hit the bottom of its 2022-23 guidance. It produced 32.25mn t in January-June 2022, but that was without the longwall move at Broadmeadow.

BMA sold 13.6mn t of coal in October-December, up by 4pc from July-September and by 10pc from October-December 2021 because of higher productivity associated with its autonomous truck fleet, higher mine yields and lower labour constraints. The backlog of visa applications for skilled migrants into Australia is slowly clearing and BMA finalised a new enterprise employment agreement for its unionised employees in December.

BHP warned that the Queensland government's royalty rate increase posed a threat to investments and jobs, further suggesting that it would be unable to make significant new investments in Queensland in the absence of competitive or predictable fiscal terms.

BHP received an average price of $270.65/t for hard coking coal and $252.12/t for weak coking coal in July-December, down from $437.60/t and $382.56/t in January-June, and from $278.60/t and $218.65/t, respectively, in July-December 2021. It defines hard coking coal as those with a coke strength after reaction (CSR) of 35 and above, with weak coking coal being those with a CSR of below 35.

Argus last assessed the premium hard low-volatile metallurgical coal price at $309.75/t fob Australia on 17 January, up from $253.30/t on 9 December 2022 but down from $320.80/t on 4 November 2022.

BHP increased the cost guidance for BMA to $100-105/t from $90-100/t in its financial year to 30 June 2023, having achieved $89.64/t in 2021-22 and $82.64/t in 2020-21.

BHP has declined to comment on Beijing's removal of the ban on Australian coal imports, which could boost Australian metallurgical coal sale prices. Several coal mining firms admitted privately that they have been approached to supply Australian coal into Chinese markets but few are prepared to comment publicly until they witness cargoes unloading into Chinese ports.

BHP completed the sale of its 80pc interest in BHP Mitsui Coal to Australian producer Stanmore on 3 May 2022.