Coronado Global Resources: Rise and Fall of a Coal PlayerASX:CRN AMEX:COAL PSE:COAL BSE:COAL1!
Coronado Global Resources (ASX:CRN) is an Australian company specializing in metallurgical coal for the steel industry. With assets in Australia and the USA, it holds a notable position in the market. But is it worth investing in now? Let’s find out.
Financial Performance for the First Half of 2024
• Revenue: $1.3 billion
• Net Profit: $16 million
• EBITDA: $135 million
• Net Debt: Only $5 million
Low debt levels and stable cash flow ($63 million for the half-year) are strengths of the company in a challenging industry.
Stocks: From Triumph to Fall
Since its IPO in 2018, when Coronado raised $500 million, the stock price has dropped from $1.50–2.50 to 26 cents. Main reasons:
• Decline in coal prices in 2024
• Collapse of the deal with Seven (Sweden)
• Global disruptions such as COVID-19
Some believe the drop is excessive and expect a recovery to $1.50–2.50.
Challenges on the Horizon
• Coal Prices: Fitch forecasts $120/ton in 2025
• Technical Issues: Failures at Curragh increase costs
• Taxes: Rising levies in Queensland squeeze margins
Growth Prospects
Coronado is not giving up:
• New Mammoth mine (launch in December 2024)
• Expansion of Buchanan in the USA
• 300 million tons of reserves in the Bowen Basin - enough for more than 20 years
Plus diversified markets (China, USA, Japan).
Outlook for Coal Demand and Growth
Despite tightening environmental regulations and the global shift to renewable energy sources, which are pressuring thermal coal, the prospects for metallurgical coal remain more resilient. This type of coal, Coronado’s specialty, is indispensable in steel production, and demand for it is likely to persist over the next 5–10 years, especially in Asia (e.g., China and Japan), where metallurgy remains a key industry. Infrastructure growth in developing economies supports this trend, and the lack of large-scale alternatives to coking coal strengthens its position. With high-quality reserves and plans to open new mines like Mammoth, Coronado is well-positioned to meet this demand. However, coal price volatility and potential technological breakthroughs in steelmaking could pose risks, requiring careful monitoring.
Is It Worth Investing?
Pros:
• Low debt and strong balance sheet
• Steady demand for metallurgical coal in the steel industry
• Price at 26 cents promises 5–10x growth potential
Cons:
• Technical analysis shows a downtrend
• Coal price volatility
Conclusion
Coronado is a risky but potentially profitable bet. Financial stability and new projects inspire optimism, but the coal market is fickle. For experienced investors, this could be an entry point.
