August 27, 2014 / 7:16 AM / 3 years ago

UPDATE 2-Whitehaven Coal sees coal price upturn as loss narrows

* Expects mine closures worldwide to shore up coal prices

* Underlying net loss of A$28.4 mln beats broker forecasts (Adds managing director comments, details)

SYDNEY, Aug 27 (Reuters) - Coal prices may have hit bottom as a wave of mine closures ease a global supply glut, Australia’s Whitehaven Coal Ltd said on Wednesday after reporting a second consecutive annual loss.

More than 20 million tonnes of annual metallurgical coal production has been closed over the past few months worldwide, Whitehaven Managing Director Paul Flynn said, while thermal coal output was also falling.

“With mine closures announced around the world, the outlook for prices should improve gradually over the rest of this year,” Flynn told a briefing.

World trade in metallurgical coal, used in steel mills, is estimated at 300 million tonnes in 2014, according to Australia’s official commodities forecaster, but prices have been mired at five-year lows due to global oversupply.

China’s Datong Coal Mine Group said this week it would cut thermal coal production and sales by 10 million tonnes in the second half, following similar announcements by China National Coal Group and Shenhua Group last month.

Whitehaven reported a net loss of A$28.4 million ($26.5 million) before one-off items in fiscal 2014 from a A$67.2 million loss the previous year, slightly ahead of market expectations.

But while others are shutting, Whitehaven is expanding after starting mining last week at its Maules Creek colliery in the coal-rich Gunnedah Basin of Australia.

At full output it will double the company’s coal production and make it Australia’s largest independent producer in a sector dominated by multi-nationals such as BHP Billiton , AngloAmerican, Glencore and Peabody Energy.

Flynn said Whitehaven was “very positive about the longer term outlook for coal”.

Talks were also underway to potentially sell of up to 30 percent of its still undeveloped Vickery mine in Australia to parties that would also buy the mine’s coal.

Separately, private equity group American Metals and Coal International and two of its principals, Hans Mende and Fritz Kundrun, bought an extra 6.2 percent stake in Whitehaven held by another equity firm First Reserve Corp, taking their combined interest to 14.8 percent.

Flynn said he “welcomed” the move as an endorsement of Whitehaven’s growth potential.

Whitehaven stock closed down 1.3 percent at A$1.89.5 against modest gains in the S&P/ASX200. (1 US dollar = 1.0734 Australian dollar) (Reporting by Jane Wardell, James Regan and Sonali Paul; Editing by Richard Pullin)

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