How Is TerraCom Steering Through Softer Coal Prices and Weather Challenges?
TerraCom reported steady coal sales for the June quarter despite softer thermal coal prices and weather disruptions, opting to withhold dividends while advancing key projects.
- Total coal sales reached 1.68 million tonnes, equity sales at 1.1 million tonnes
- No dividend declared due to current thermal coal pricing environment
- Blair Athol mine sales steady at 498kt with average coal price down to A$128.01/t
- South African operations impacted by rail constraints, domestic sales remain stable
- FY2026 plan prioritizes value over volume with lean cost structure and 1.6Mt sales forecast
Operational Resilience Amid Market Challenges
TerraCom Limited has released its quarterly report for the period ending 30 June 2025, revealing a solid operational performance despite a softer thermal coal pricing environment and persistent weather disruptions in Queensland. The company recorded total coal sales of 1.68 million tonnes, with equity coal sales of 1.1 million tonnes, reflecting steady demand across its Australian and South African operations.
At the heart of TerraCom’s Australian operations, the Blair Athol mine delivered 498,000 tonnes in coal sales for the quarter. However, the average coal price achieved fell to A$128.01 per tonne, down from A$165.40 in the previous quarter, underscoring the pressure on thermal coal prices globally. Elevated rainfall in Central Queensland continued to challenge mining and supply chain activities, yet the operation maintained stable free on board (FOB) costs at $118 per tonne, demonstrating disciplined cost management.
South African Operations Face Export Constraints
TerraCom’s South African business unit experienced a 23% decrease in coal sales compared to the previous year, largely due to ongoing rail infrastructure constraints that limited export volumes. Despite these challenges, domestic sales remained robust, with the North Block Complex increasing domestic coal sales by 23% quarter-on-quarter. The company is mitigating export limitations by executing Free On Train (FOT) mine gate sales through established coal traders, ensuring continued revenue flow from export products.
Strategic Outlook and Corporate Developments
Reflecting the current market conditions, TerraCom’s board has decided not to declare a dividend for the quarter ending 30 June 2025. The company’s FY2026 plan emphasizes value over volume, supported by a responsive mine plan and a lean cost structure, with forecast coal sales set at 1.6 million tonnes. This approach aims to capture upside from any recovery in coal prices while maintaining financial discipline.
On the corporate front, TerraCom announced the resignation of Chief Financial Officer Megan Etcell, with recruitment underway for a Brisbane-based replacement. Additionally, the company’s registered office will relocate to Brisbane effective 1 August 2025. Notably, a legal case brought by the Australian Securities and Investments Commission (ASIC) against TerraCom and its Managing Director was dismissed by the Federal Court in July, removing a significant regulatory overhang.
Market Outlook and Project Development
Thermal coal pricing during the quarter remained relatively stable, supported by fixed-price forward sales and a steady NEWC6000 index. The outlook for the September quarter anticipates modest price increases driven by restocking demand from Asia Pacific markets, particularly Japan, South Korea, and India. TerraCom is also advancing the Moorlands Thermal Coal Project in partnership with Wintime, positioning it as a key growth asset in Australia’s coal sector.
Bottom Line?
TerraCom’s disciplined approach and strategic pivot to value over volume will be critical as it navigates ongoing market and operational headwinds.
Questions in the middle?
- How will TerraCom’s new CFO influence financial strategy amid market volatility?
- What impact will South Africa’s rail constraints have on TerraCom’s export growth potential?
- Can the Moorlands Thermal Coal Project accelerate TerraCom’s Australian growth trajectory?
