Coronado’s unique position
As a business focused on supplying global steel producers with high quality metallurgical coal, Coronado has a fundamental role to play in continued output of this essential material which supports both a sustainable global environment and continued economic growth.
We have become a leader in the metallurgical coal industry over recent years, demonstrating a track record of making value accretive acquisitions, driving production growth and increased sales from our unique portfolio of assets. Underpinning Coronado’s performance is a clear focus on extracting higher returning incremental tonnes of metallurgical coal, optimising our product mix, and improvement in operating efficiencies. With more than one billion tonnes of reserves and resources and a mine life of more than 20 years for each of the company’s major assets, Coronado is set to become a key player in the global metallurgical coal market over the long term.
Our operations are situated in two of the largest and most productive metallurgical coal basins in the world, the Bowen Basin in Queensland, Australia and the Central Appalachian region of the US. This geographic exposure has provided an effective hedge against a difficult operating environment during the past year, particularly in the second half of 2019, which was largely defined by fluctuations in global demand and trade restrictions between the US and China.
Despite the recent global headwinds that have been faced by the resources sector, we remain firmly focused on what we can control as a company including operational costs, a strong balance sheet, and our focused business strategy relative to our peers. During the last year we have demonstrated our ability to operate as efficiently as anyone in the industry, while also tailoring production to meet the needs of our customers.
Continual optimisation of our assets and product remains a key strategic pillar as we move through the commodity cycle. The results of 2019 clearly show this, with Coronado increasing profits from similar production and sales volumes compared to the prior year.
As we drive further efficiencies and incremental growth through our mining operations, we are well positioned to take advantage of the opportunities ahead of us, both organic and inorganic, thanks to a sound financial position and a disciplined approach to investment and capital expenditure.
This financial strength has also supported Coronado’s ongoing commitment to regular distributions for our shareholders, which since listing on the ASX in October 2018, now total 74.5 cents per CDI (USD).
Positive momentum with key objectives
It was incredibly pleasing to see our team successfully achieve these objectives, most of which were focused on our Curragh Mine in Australia, which was acquired in 2018, and has transformed Coronado into the largest dedicated metallurgical coal producer globally. Since the acquisition of Curragh, we have extracted significant improvements in operating efficiency in the performance of the draglines and the wash plant. This has been key to our ability to reduce operating costs measured on a per tonne basis. Our ability to manage mines as efficiently as possible will ensure that Coronado can withstand the peaks and troughs of the commodity markets.
At Curragh, we have also acquired additional reserves through the Stanwell Reserved Area and developed an accelerated expansion plan for the mine and secured the necessary rail and port infrastructure to support this expansion along with planned blending opportunities. Additional port capacity and rail haulage agreements that are now in place will allow Coronado to increase saleable production to 15Mt in coming years, while also providing headroom for further growth.
Expanding metallurgical coal production to 74% of total production during the year was another key objective of our team. In addition to the expansion plans at Curragh, we were able to reconfigure our Logan Mine Complex in the US to introduce three new sources which increased metallurgical coal revenue for the year by 28.2% to $250 million.
In contrast, the decision was made to suspend thermal coal production at the Logan complex’s Toney Fork surface mine, Coronado’s only dedicated source of thermal coal. The impacts of suspending thermal coal production have been minimal to our business, with reduced thermal volumes offset by the production of higher quality metallurgical coal from Logan’s new mine areas.
Our final objective was a redesign of our Buchanan Mine in the US to extend its life and improve quality overall, which was carried out successfully during the year. While costs at Buchanan rose during the year due to idled mine operations resulting from US China trade restrictions and tariffs and softening global demand, Buchanan remains a prestige asset with excellent management and mining talent.