September 19, 2017 / 3:08 AM / 10 months ago

New Hope says looking for more coal acquisitions in Australia

MELBOURNE (Reuters) - New Hope Corp is chasing more coal mine acquisitions in Australia over the next year to drive growth, its boss said on Tuesday after reporting a huge rise in annual profit on the back of an earlier expansion and higher coal prices.

New Hope Managing Director Shane Stephan said the company sees more opportunities to supply coal to Asia, including China, Japan, South Korea and Taiwan, particularly for new high efficiency-low emissions (HELE) power stations, and would look for acquisitions to help meet that demand.

“We see a long-term future for thermal coal into Asian markets, so we will continue to look at multiple potential acquisition targets over the next 12 to 18 months,” Stephan told Reuters in an interview.

Thermal coal stakes up for sale include Glencore’s Rolleston mine and Wesfarmers’ stake in the Bengalla mine.

New Hope, one of two listed independent coal producers in Australia, bought a 40 percent stake in the Bengalla mine in New South Wales state from Rio Tinto two years ago for $606 million.

That acquisition, coupled with higher prices, underpinned a surge in net profit before one-offs to A$128.7 million ($102.6 million) for the year to July 31 from A$5.0 million a year earlier.

Australia’s Newcastle coal prices have traded between about $72 and $106 this year, well above lows around $47 last year. The current Japanese benchmark price is around $85.

That has spurred New Hope to try to produce as much as possible, even at its depleting New Acland mine in Queensland.

Stephan said his firm could also benefit from Asian coal buyer concerns about Glencore’s expansion in Australia following its recent acquisition with China’s Yancoal Australia of Rio Tinto’s Coal & Allied unit.

“This places Glencore in a dominant position in the export market out of Australia for thermal coal,” he said.

“So we see it as an opportunity for us as an independent to grow our supply capability over the next few years, because we believe that that will be supported by the end customers.”

New Hope’s shares rose as much as 5.6 percent to a five-month high of A$1.88 after releasing its annual results.

($1 = 1.2544 Australian dollars)

Reporting by Sonali Paul; Editing by Richard Pullin

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