New Hope has joined the competition to acquire Anglo American’s five Queensland coal mines, but has signaled that the UK-listed miner will need to lower its asking price to close the deal.
New Hope’s CEO, Rob Bishop, submitted a preliminary bid for the coking coal mines earlier this month, while also pushing forward with the company’s plans to double thermal coal production at its existing mines by 2028.
If successful, the acquisition would mark New Hope’s entry into the steelmaking coal market, also known as coking or metallurgical coal, diversifying its portfolio beyond thermal coal, which is primarily used in power generation.
New Hope is already nearing its goal of doubling coal production across its New South Wales and Queensland operations, according to a report in the Australian Financial Review (AFR).
The price of Australian coking coal futures has fallen by almost a third since August, now at $US189 ($280) per tonne, after China’s largest steelmaker issued a warning about tough times ahead for the steel industry. However, long-term projections remain strong, with fewer mines receiving government approvals and the global decarbonization of steelmaking facing challenges. Macquarie analysts forecast prices will rise to $US320 a tonne by 2026-2027.
Anglo American initially aimed to sell its five coking coal mines in a single package for $US5 billion, according to AFR’s Street Talk in July. However, a fire at its flagship Grosvenor mine in June is expected to affect the portfolio’s valuation.
“The recent fire at the Grosvenor coal mine will likely impact the asset’s valuation, as it won’t be operational for several years,” Bishop acknowledged. Despite this, he confirmed New Hope’s interest in the assets, saying, “We saw opportunities that align with our strategic goals and will continue to pursue them.”
New Hope, majority-owned by Washington H. Soul Pattinson, participated in the first phase of the auction, with bidders now awaiting feedback.
“We should hear very soon. I assume they want to maintain momentum,” Bishop added.
Sam Berridge, who manages Perennial’s Natural Resources Trust, commented: “This is the kind of market where New Hope has historically thrived, buying at the bottom of the cycle. Take their acquisition of a stake in the Bengalla thermal coal mine in 2015, when coal prices were around $US57 a tonne—now they’re at $US140.”
Romano Sala Tenna, portfolio manager at Katana Asset Management, expressed surprise at New Hope’s interest given the company’s $800 million in cash and available credit. He noted that global mining giants like Glencore are seen as frontrunners for the purchase, suggesting New Hope might bid as part of a syndicate.
Even without acquiring Anglo’s assets, Bishop aims to double New Hope’s coal output by 2028 to meet growing demand for thermal coal, particularly from Asia, which has outpaced declining consumption in the U.S. and Europe.
After reporting the company’s full-year financial results on Tuesday, Bishop said production is set to rise from 7 million metric tonnes in 2023 to over 14 million metric tonnes by 2028, following the approval of its Acland mine in Queensland after a prolonged legal battle.
New Hope produced 9.1 million metric tonnes of coal in the 12 months leading up to July 31, a 26.4% increase from the previous year.
Despite this, New Hope’s average sale price per tonne dropped to $183, a 47% decrease from $346 in 2022-23, due to a milder winter in the Northern Hemisphere and increased customer stockpiles.
As a result, the company’s net profit for the year halved, coming in at $475 million—slightly below market expectations of $492 million—down from $1.08 billion in the previous year.
New Hope will pay a final dividend of 22¢ per share, bringing total dividends for the year to 39¢ per share, payable on October 24.
