Whitehaven extends buyback as soaring coal prices boost coffers

Australian coal miner Whitehaven says it’s primed to pocket a hefty premium for the fossil fuel as the global energy crunch sends coal prices soaring, but warned that the boom is unlikely to last in the long term.

Prices of thermal coal, used to generate energy, have shot to new highs following the start of the conflict in Ukraine, reaching record levels of around US$467 a tonne. They were trading at US$188 a tonne a year ago.

Whitehaven, which generated $4.9 billion in revenue last financial year through coal exports, is one of Australia’s biggest independent coal producers. While the rapid push to decarbonise advanced economies spells the end of thermal coal, the miner is banking on demand from Asian customers – Japan, Korea, Taiwan – to remain robust.

The $9 billion coal miner’s shares have been on a tear this year, up over 246 per cent. They were trading at $2.76 in January and closed the session on Wednesday at $9.52.

Whitehaven on Wednesday won shareholder approval to extend its on-market share buy back, picking up another 240 million shares (25 per cent of its issued capital) over the next 12 months. The miner completed the buyback of 10 per cent of its issued capital earlier this month.

It told investors at its annual meeting on Wednesday that the “structural change” of rapid decarbonisation will result in tapering demand for thermal seaborne coal through to 2050. However, Whitehaven’s exposure to long-term contracts in key Asian markets should provide it a buffer.

“We acknowledge the role we play, and will need to play in the coming decades, including being one of the few coal producers in the world that is in a position to bring on new thermal coal production through our Vickery development project,” chief executive Paul Flynn said

“The youngest fleet of coal-fired power stations is in Asia, in our backyard, and given we are in an environment of heightened energy security … our customers are very concerned about physical security [of supply] not just for today … but the longer term,” Flynn said.