However,the NSW government’s announcement on Thursday of final directions under its coal reservation scheme dented investors’ enthusiasm for the sector locally,with Whitehaven shares slipping 2.7 per cent to $7.96 and Yancoal shares slumping 2.3 per cent to $5.64 on the news.
Under the scheme,miners will be required to set aside 200,000 tonnes per quarter or 5 per cent of each mine’s expected saleable thermal coal output,whichever is lower,for Australia’s coal-fired power stations. In a concession to the industry,NSW treasurer Matt Kean said any miner that can demonstrate production costs exceeding the cap of $125 per tonne can apply to increase the cap.
The measures were introduced as part of federal and state government efforts to shore up supplies and drive down electricity bills,which had been forecast to rise by up to 40 per cent next year.
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Whitehaven said it is finalising plans to meet its obligations under the scheme in a way that minimises value leakage for its customers and shareholders. “This is largely a political issue. That is my concern. There’s not a shortage of coal going around,it’s a price issue,” chief executive Paul Flynn said.
Meanwhile,Glencore will return more than $10 billion to shareholders in dividends and buybacks after the commodities giant reported another blockbuster profit driven by its coal and trading divisions.
The mining giant’s core profit rose 60 per cent to a record $49.37 billion,of which more than half - $25.92 billion - came from coal production,the company said in a statement on Wednesday. The commodity trading unit earned $9.27 billion in core profit,also its highest ever.