Coronado Reports 10% Cost Reduction and $325M Liquidity Despite 15% Production Dip
Coronado Global Resources delivered March quarter production in line with plans despite Queensland rainfall, progressing key expansion projects and implementing significant cost reductions to navigate challenging metallurgical coal markets.
- March quarter ROM production aligned with forecasts despite adverse weather
- Mammoth and Buchanan expansions on track to boost H2 2025 cash flow
- Average mining costs per tonne sold down 10% year-on-year
- Long-term coal sales agreement extended with Tata Steel through 2028
- Liquidity maintained at $325 million amid Asset-Based Lending facility restructuring
Production Resilience Amid Weather Challenges
Coronado Global Resources reported a March 2025 quarter that demonstrated operational resilience, with run-of-mine (ROM) production meeting planned targets despite significant rainfall in Queensland. The Curragh Complex, a key Australian asset, managed to sustain production levels in the face of weather disruptions, underscoring the effectiveness of recent production improvement initiatives.
While saleable production was slightly behind plan due to reduced domestic thermal coal output and plant performance issues at Logan, these were largely offset by prioritising metallurgical coal exports and drawing down inventory from prior periods. The company expects these timing-related sales volume impacts to be recovered in the June quarter.
Expansion Projects Poised to Drive Growth
Coronado’s expansion projects at the Mammoth Underground Mine and Buchanan Complex remain on track for practical completion, with commissioning activities progressing as scheduled. Mammoth is expected to add up to 2 million tonnes of incremental saleable production by early 2026, while Buchanan’s expansion is approximately 90% complete and set to come online by June 2025.
These projects are anticipated to deliver a step change in production capacity and reduce capital expenditure intensity, supporting improved cash flow in the second half of 2025. The Buchanan expansion also promises to extend mine life beyond 20 years, enhancing the company’s long-term asset base.
Cost Reductions and Liquidity Management
In response to continued low metallurgical coal prices, Coronado is actively restructuring its business to preserve cash and improve near-term liquidity. The company has achieved a 10% reduction in average mining costs per tonne sold compared to the March 2024 quarter, primarily through fleet reductions at Curragh and operational efficiencies.
Further cost and capital expenditure reductions of up to $100 million are expected over the remainder of the financial year, including rephasing development at Buchanan, idling surface operations at Logan, and broad budget cuts at Curragh. These measures are complemented by ongoing negotiations to restructure the Asset-Based Lending (ABL) Facility, which currently provides $96 million in undrawn capacity.
As of 31 March 2025, Coronado held total liquidity of $325 million, comprising $229 million in cash and $96 million available on the ABL Facility. The company has secured covenant waivers and extended testing periods with lenders to maintain financial flexibility during this period of market uncertainty.
Market Conditions and Outlook
Metallurgical coal prices remained subdued in the March quarter, with the PLV HCC FOB Australian benchmark index falling to $185 per tonne from $203 in the prior quarter. Coronado attributes this downturn to weak global steel demand, intensified competition from low-cost producers, and tariff pressures, particularly from China.
Despite these headwinds, Coronado believes prices are approaching marginal cost support levels, which could prompt supply rationalisation and market stabilization. The company remains optimistic about a recovery in the second half of 2025, driven by anticipated steel production growth outside China, increased tariffs on Chinese steel exports, and improved trade dynamics.
Strategic Partnerships and Safety Performance
Coronado extended its long-term sales agreement with Tata Steel through March 2028, securing over 2 million tonnes of metallurgical coal sales annually across its Australian and U.S. operations. This contract provides a stable revenue foundation amid volatile market conditions.
Safety metrics also improved, with the Group Total Reportable Incident Rate (TRIR) at 0.95 and both Australian and U.S. operations outperforming planned safety targets. The company continues to implement initiatives aimed at further enhancing workplace safety.
Looking ahead, Coronado plans to release its first quarter 2025 reviewed financial results in early May, which will provide further insight into the company’s financial health and operational progress.
Bottom Line?
As Coronado navigates a challenging pricing environment, its disciplined cost management and expansion progress position it well for a market rebound in the latter half of 2025.
Questions in the middle?
- How will the restructuring of the Asset-Based Lending Facility impact Coronado’s financial flexibility?
- What is the timeline and expected ramp-up rate for production from the Mammoth and Buchanan expansions?
- How sensitive is Coronado’s profitability to further fluctuations in metallurgical coal prices?
