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Australia's Cook coking coal mine to shut as producer Bounty goes into administration

Singapore — Australia's Bounty Mining late Tuesday said its Cook mine in central Queensland, which produced a record 174,951 mt of coal in the July-September quarter, has been closed due to financial difficulties caused by falling metallurgical coal prices.

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The Sydney-based company went into administration late Tuesday citing "depressed coking coal prices" and "production shortfalls in the wake of the previously announced roof falls."

The company's administrator PwC said in a statement: "We intend to transition the Cook Colliery's operations into care and maintenance whilst we undertake an urgent assessment of the business and explore all options to sell and/or restructure the business for the future."

The Cook mine in the Bowen Basin produced 406,000 mt of mid-vol hard coking coal in the fiscal year to June 30. Bounty Mining had been planning to expand the mine's total coal capacity to more than 2 million mt/year.

However, after losing 23,000 mt of run-of-mine output due to a rock fall in October, Bounty warned of a potential loss of 150,000 mt in the current fiscal year ending June 30, 2020. It said at the time that some 135,000 mt of coal reserves would be lost due to changes in mining operations, which would impact future production levels.

The company acquired the Cook mine in December 2017 from Calendon, which itself went into liquidation, but has struggled to raise enough funds to generate working capital to cover operating losses.

In its July-September quarter report, Bounty Mining said it had "railed" 113,000 mt of coking coal in the quarter, which was sold to Xcoal Energy and Resources Gmbh under "prepaid sales agreements."

The company produces a mid-vol hard coking coal and references the S&P Global Platts HCC 64 price in its operations reports. The average price for this product over July-September was $179.91/mt CFR Jingtang, but it fell to $159.41/mt over October-November, Platts data showed.

On its website, Bounty Mining said its 2019 coal resource estimate was 210 million mt for the Cook Colliery and the adjoining Cook North project.

Coal from Cook Colliery is trucked 14 km to a train-loading facility linked to the Blackwater network and travels around 290 km from there to Gladstone port for export.

Seaborne metallurgical coal prices have fallen sharply in 2019 amid an oversupplied market, with the benchmark Platts PLV FOB Australia dropping 39% year to date. Price weakness was observed across the board, with price reductions recorded for HCC 64 hard coking coal (down 34%), low-vol pulverized coal injection (down 30%) and semi-hard coking coal (down 36%).

However, trade volumes in the spot market have surged this year on lower seaborne prices and strong Chinese import demand. Based on Platts spot trade data, 39.74 million mt of spot transactions have been reported in the premium hard coking coal market to date in 2019, up 6% from 37.44 million mt reported in the same period last year.

-- Jeffery Lu, jeffery.lu@spglobal.com

-- Paul Bartholomew, paul.bartholomew@spglobal.com

-- Edited by Wendy Wells, wendy.wells@spglobal.com