Whitehaven Coal, one of Australia’s largest producers, has posted a record after tax profit of $405 million thanks to exports to South Asia, but has ruled out selling coal into the domestic market in the near future.
Whitehaven Coal, which has five coal mines in NSW, recorded earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.77 billion in fiscal 2017, up 52 per cent on the previous year.
CEO Paul Flynn said that it made more sense to trade with partners that had stable energy policies, rather than to trade in a domestic market wracked by uncertainty.
Mr Flynn put the blame for this squarely on the government for the lack of a comprehensive national energy policy.
The East Coast based mining company on Thursday posted a 20-fold jump in full year profit, which is due to surging prices of premium grade thermal coal.
Whitehaven Coal exports 21 million tonnes
While the amounts it sells locally are negligible, Whitehaven Coal exports 21 million tonnes of the fuel to Japan, China, South Korea, Taiwan and India, where there has been much investment in modern high energy low emissions (HELE) power plants.
Turning to the Finkel Review, Mr Flynn said it was good that discussion has started, but also said that other countries had taken decisions about the stability of supply of their electricity network years ago.
Speaking to the Australian Associated Press, he said: “We are obviously taking and ruminating longer over this type of question than others have done – from a cost perspective, grid stability perspective and reliability perspective HELE plays a big part for them.”
Whitehaven Coal is leveraged to Asian growth market
Justifying the commercial decision, Mr Flynn said Whitehaven Coal is leveraged to the growth market in Asia and the pragmatic choice that they have already made. He said that as a result, Whitehaven has zero exposure to the machinations of Australia’s energy debate.
According to a recent report by the Minerals Council of Australia, more than 1,100 power plants based on HELE technology are being planned or constructed across Asia.
There are six such power stations currently operating in Australia, but no new plants are being planned. On the other hand, Energy Minister Josh Frydenberg recently did a U-turn and said that the government was now open to the idea of coal-fired power stations, even though in July, he had signalled that it was not on the agenda.
Energy company executives have repeatedly blamed the absence of an emissions trading scheme for the lack of incentive to invest in low-carbon electricity and urged the government to set up a clean energy target to ensure reliability of supply.
Whitehaven Coal CEO says Australia’s situation is extraordinary
Mr Flynn said given the abundance of coal resources, it is extraordinary that Australia has some of the most expensive electricity in the world.
“I am sure, reflecting back, politicians will have to acknowledge that there has been a policy failure here over many years,” he said.
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