Whitehaven Coal Ramps Up Met Coal Sales, Depleting Stock Amid Market Uncertainty

Sydney, January 29, 2025 – Whitehaven Coal has aggressively increased its metallurgical coal sales, reducing stock levels by 38% quarter-on-quarter (QoQ) as it seeks to capitalize on strong demand despite pricing challenges.

In its December 2024 Quarterly Report, Whitehaven reported 4.62 million tonnes (Mt) of met coal sales from its Queensland operations, marking a 28% QoQ increase, even as production fell 14% due to seasonal weather disruptions. The company achieved an average met coal price of $152 per tonne, or 75% of the PLV HCC benchmark of $203 per tonne.

The surge in sales, outpacing production, suggests Whitehaven is prioritizing cash flow optimization and working capital efficiency, potentially bracing for short-term pricing pressure in the metallurgical coal market. However, with stocks depleting, a price recovery may be on the horizon as supply tightens.

Whitehaven’s CEO, Paul Flynn, emphasized ongoing cost-cutting initiatives and rail logistics improvements, particularly at the Daunia mine, to maintain competitive pricing.

With global steel demand fluctuating and India’s met coal appetite yet to rebound fully, traders are watching Whitehaven’s next moves closely, as tighter inventory could shift pricing power back in its favor.

Scenario Breakdown

1. Current Production (H1 FY25): 9.9 Mt

   • No additional production needed for H1.

   • Only serves as a baseline for H2 planning.

2. Lower Guidance Target (17.6 Mt for FY25): Requires 7.7 Mt more in H2

   • Avg Quarterly Production Needed: 3.85 Mt per quarter.

   • Achievable without increasing current Q2 production rates (~4.6 Mt).

3. 50th Percentile Guidance Target (18.8 Mt for FY25) (Revised): Requires 8.9 Mt more in H2

   • Revised Strategy: Q3: 4.3 Mt, Q4: 4.6 Mt (gradual ramp-up).

   • More realistic production path with incremental increases.

4. Upper Guidance Target (19.7 Mt for FY25): Requires 9.8 Mt more in H2

   • Avg Quarterly Production Needed: 4.90 Mt per quarter.

   • Requires higher production ramp-up (~7% increase from Q2 levels).

     
     

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Price and Cost Analysis (Converted to USD)

QLD Achieved Price (75% of PLV HCC): $152/t.

NSW Achieved Price (100% of gC NEWC Index): $137/t.

Unit Production Cost (excluding royalties, converted to USD): $93–103/t (based on A$140–155/t and USD/AUD ~0.66).

Average Royalties: $17/t (based on A$25/t and USD/AUD ~0.66).

Total Cost (Including Royalties): $110–120/t.

Profit Margins and Market Position

QLD Met Coal Gross Margin: ~$32–42/t (21-28% margin at $152/t achieved price).

NSW Met Coal Gross Margin: ~$17–27/t (12-20% margin at $137/t achieved price).

Relative Discount to PLV HCC Index: QLD’s met coal achieved only 75% of the index, likely due to lower-quality blend (HCC/SSCC/PCI mix).

Key Takeaways

• Maintaining Q2 production levels (4.6 Mt) ensures hitting lower guidance.

• To hit the 50th percentile, Whitehaven needs a slight increase (~4.3 Mt in Q3, ~4.6 Mt in Q4).

• For the upper range, a consistent 4.9 Mt per quarter is necessary (~7% increase from Q2).

• Production costs remain between $93-$103 per ton, exclusive of royalties.