Chinese and international benchmark coal prices have jumped in recent days to multi-month highs as Chinese thermal coal power generation surged in October while domestic production fell amid curbs to address excess capacity and oversupply in key industries. This week, thermal coal prices at Qinhuangdao port assessed by consultancy SteelHome hit the highest in a year as they rose by 37% from the four-year lows seen in July, data compiled by Reuters columnist Clyde Russell showed. The higher Chinese pri ...

November 18, 2025 12:37 AM GMT China Coal | Asia Pacific Coal Expert Key Call Takeaways Key Takeaways 2026 total coal imports is expected fall to ~480mnt, vs. 493mnt projected for 2025: Mr. Feng Dongbin, vice president at SXCoal (a coal industry consultant based in Shanxi), sees thermal and coking coal imports at 373mnt and 107mnt in 2026, respectively, vs. 383mnt and 110mnt in 2025. With a widening import price arbitrage between domestic and Indonesian coal since September, Mr. Feng sees higher import arri ...

Financial Data and Key Metrics Changes - The company reported a GAAP net loss attributable to common stockholders of $70.1 million or $0.58 per diluted share, which included $54 million of acquisition termination costs [24] - Adjusted EBITDA was just under $100 million, with operating cash flow of $122 million [24][22] - Cash position at September 30 was $603 million, with total liquidity exceeding $950 million [22] Business Line Data and Key Metrics Changes - Seaborne thermal segment recorded $41 million of adjusted EBITDA with 17% margins, exceeding expectations with an increase of 500,000 tons quarter over quarter [24] - Seaborne metallurgical segment reported adjusted EBITDA of $28 million, with revenue per ton rising 6% quarter over quarter [25] - U.S. thermal mines generated $59 million of adjusted EBITDA, driven by improved domestic demand [26] Market Data and Key Metrics Changes - The average benchmark price for seaborne thermal coal increased by 8% in the third quarter [14] - U.S. coal generation increased by 11% year to date, driven by favorable market fundamentals [15] - Seaborne metallurgical coal benchmark price averaged $184 per metric tonne, unchanged from Q2 [12] Company Strategy and Development Direction - The company is focused on safe, productive, and environmentally sound operations, with an emphasis on maximizing shareholder returns [34] - The Centurion mine is expected to significantly boost the company's metallurgical coal portfolio, with production expected to expand sevenfold in 2026 [3][4] - The company is assessing its potential to meet growing U.S. needs for rare earth elements and critical minerals [35] Management's Comments on Operating Environment and Future Outlook - Management highlighted the increasing demand for coal due to the growth of data centers and manufacturing in the U.S. [6][7] - The company anticipates that coal's role in power generation will remain significant, especially during peak demand periods [7][8] - Management expressed confidence in the ability to generate free cash flow and deliver outsized returns to shareholders [22] Other Important Information - The company is in the early stages of assessing its potential for producing rare earth elements and critical minerals, with preliminary data expected by year-end [35][76] - The company has a robust balance sheet, providing flexibility to navigate market volatility [31] Q&A Session Summary Question: What is the maximum level of output Peabody could produce in the PRB? - Management indicated that expansion would depend on customer commitments and price signals, with latent capacity being absorbed quickly [39][49] Question: How is the company thinking about M&A opportunities in the metallurgical segment? - The focus remains on getting the Centurion mine operational and maximizing output before considering further M&A [54][56] Question: What details can be expected regarding rare earth elements by year-end? - Management stated that a preliminary analysis of indicative element types and concentrations will be provided at year-end [74][75] Question: What impact do recent U.S.-China agreements on rare earths have on domestic projects? - Management noted a strong desire for domestic supply of rare earth elements, but specifics on government support were not provided [81] Question: Will the arbitration process with Anglo American affect future M&A? - Management expressed confidence in the arbitration process and stated it would not hinder strategic decisions regarding M&A [82]

Group 1 - Peabody Energy is a leading coal producer with 17 mining assets located in the US and Australia, focusing on thermal coal for electricity production and metallurgical coal for steel production [1] - Coal prices have cooled since the boom experienced in 2021/22, indicating a shift in market dynamics [1]

Group 1 - Peabody Energy is a leading coal producer with 17 mining assets in the US and Australia, supplying both thermal coal for electricity production and metallurgical coal for steel production [1] - Coal prices have cooled since the boom in 2021/22, indicating a shift in market dynamics [1]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China's Coal Segment - **Current Status**: The coal segment is in structural decline due to the energy transition, with thermal coal facing slight oversupply while coking coal is broadly balanced for the year [1][4] Core Insights - **Thermal Coal**: - Demand is expected to decline by approximately 1% YoY to around 4.17 billion tons (bnt) in 2025, driven by a 2.5% drop in power-sector coal consumption and a 6% decrease in construction-related consumption [3][19] - Total thermal coal supply is projected to increase by about 1% YoY to 4.3 billion tons in 2025, despite a 12% YoY drop in imports [3][18] - The average price of thermal coal has corrected by 22% YoY, with domestic prices hitting lows of RMB 677 per ton [18] - **Coking Coal**: - Supply is expected to remain flat at approximately 592 million tons (mnt) in 2025, with demand also flat at 591 mnt, supported by stable pig iron production [4][22] - The market is expected to face rising supply pressure in the coming years, despite current balance [4] Policy Context - **Regulatory Environment**: The current industry backdrop is different from the 2015 supply-side reform, with fewer loss-makers and greater consolidation. The share of output from large, advanced mines has increased, making broad cuts unlikely [2][16] - **Safety and Environmental Checks**: Supply discipline is more likely to come from tighter safety and environmental checks rather than blanket quotas [2][16] Stock Implications - **Investment Ratings**: - Shenhuo Coal & Power initiated at Overweight (OW) due to strong aluminum contributions [6][26] - Shenhua (H) remains OW, while Yankuang H is moved to Equal Weight (EW) and Yancoal Australia to Underweight (UW) [6][10] - China Coal (A) is rated UW, reflecting a weaker outlook [6][10] Risks and Opportunities - **Key Risks**: Implementation of anti-involution measures could lead to deeper production cuts, driving prices up for both thermal and coking coal [5][28] - **Other Risks**: Stricter inspections could lead to material supply reductions, while stronger-than-expected thermal power demand could increase coal demand [31] Additional Insights - **Market Preferences**: Coal is ranked lower among commodities, with preferences for copper, aluminum, and steel over coal [24] - **Dividend Yields**: Coal producers typically offer high dividend payouts, around 5%, which may attract yield-focused investors despite the structural downturn [27] Conclusion - The coal industry in China is navigating a complex landscape marked by declining demand, regulatory scrutiny, and shifting market dynamics. While coking coal remains relatively balanced, thermal coal faces significant challenges. Investment strategies should consider the potential for regulatory impacts and the overall commodity landscape.

Core Viewpoint - Peabody has terminated its purchase agreements with Anglo American Plc due to a material adverse change related to Anglo's steelmaking coal assets, following an ignition event at Anglo's Moranbah North Mine, which has no clear timeline for resuming production [1][2]. Group 1: Termination of Agreements - Peabody's decision to terminate the transaction comes nearly five months after an ignition event at Anglo's Moranbah North Mine, with no definitive timeline for resuming sustainable longwall production [1]. - The two companies did not reach a revised agreement to address the material adverse change that would compensate Peabody for the impacts on the acquisition [2]. - Peabody has also terminated the agreement for the related sale of the Dawson Mine to PT Bukit Makmur Mandiri Utama [3]. Group 2: Financial Implications - Anglo estimates holding costs at Moranbah North to be $45 million per month, with the mine previously targeted to produce 5.3 million tons of saleable production in 2025 [2]. - There is currently no timetable for the resumption of longwall production at forecasted volumes and costs [2]. Group 3: Strategic Positioning - Peabody's portfolio is well positioned with growing exposure to seaborne metallurgical coal, highlighted by the new 25-year premium hard coking coal Centurion Mine [4]. - The company intends to execute a four-pronged strategy for value creation, focusing on managing safe, productive, and environmentally responsible operations [5]. - Peabody aims to return 65-100% of available free cash flow to shareholders primarily through share buybacks, while maintaining a resilient balance sheet and exercising strong capital discipline [5].

Financial Data and Key Metrics Changes - In Q2 2025, the company generated $46 million of free cash flow and $203 million over the last twelve months, despite key commodities trading at or near operators' cost of production [6][7] - The net income for Q2 2025 was $34 million, with the mineral rights segment contributing $40 million in net income, a decrease of $13 million compared to the prior year [13] Business Line Data and Key Metrics Changes - The mineral rights segment's operating and free cash flow each decreased by $11 million year-over-year due to weaker coal markets [13] - The soda ash segment generated $3 million in net income, down $1 million from the previous year, with operating and free cash flow each decreasing by $3 million due to lower sales prices [14] Market Data and Key Metrics Changes - The metallurgical coal market remains under pressure with soft demand for steel and high coal inventories, leading to operators selling coal at or near production costs [7][8] - The soda ash market is significantly oversupplied, with prices below production costs for most producers, and expected to remain low until demand rebounds or supply rationalizes [10][11] Company Strategy and Development Direction - The company aims to pay off substantially all debt by mid-next year and increase unitholder distributions starting next August [7][12] - Future cash priorities post-deleveraging will focus on unitholder distributions, unit repurchases, and opportunistic investments [21] Management's Comments on Operating Environment and Future Outlook - Management noted that many operators are in better financial shape than in previous downturns, which bodes well for the industry [8][9] - The current market for key commodities is as negative as ever, but the company continues to generate robust free cash flow [11] Other Important Information - The company has not made significant progress on COVID carbon neutral initiatives, with the market for most C and I activities remaining stagnant [11] Q&A Session Summary Question: Are there opportunities to acquire additional royalty or soda ash assets post-debt repayment? - Management indicated that while the mineral rights market is fragmented and not very active, there are always possibilities for one-off transactions [19][20] Question: What are the priorities for cash after achieving a debt-free status? - Management stated that priorities will be unitholder distributions, unit repurchases at discounts, and opportunistic investments in assets at bargain prices [21] Question: Is there potential for other mineral opportunities across the company's land? - Management acknowledged the possibility of future opportunities but did not specify any current targets [22]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Coal Sector - **Focus**: Coking Coal and Thermal Coal Core Insights 1. **Overproduction Issues**: - 22% of sampled coking coal mines are experiencing overproduction, impacting 26% of their volume [2][3] - 14% of sampled thermal coal mines have overproduction issues, affecting 3% of total capacity [4][7] 2. **Market Dynamics**: - The met coal price is expected to become attractive for imports when it reaches approximately Rmb1300/ton [2][3] - Thermal coal prices are projected to rebound to Rmb670/ton during the summer but may soften to Rmb610/ton by year-end [4] 3. **Government Policies**: - The National Energy Administration (NEA) and local governments are expected to implement moderate execution of overcapacity policies to balance production stability and local economic interests [3] - The tone from the Xinjiang NDRC appears more lenient compared to Henan and Ordos, indicating varying regional approaches to overproduction management [3] 4. **Production and Cost Analysis**: - The all-in cost for most Chinese met coal is between Rmb600-1,000/ton, leading to losses earlier in the year but returning to profitability recently [3] - Current daily output of met coal is approximately 1.9 million tons, which is 5% higher than the year's low but still 10% below the peak of 2.1-2.2 million tons expected in 2024 [3] 5. **Future Projections**: - The thermal coal production target for Shanxi is set at 1.3 billion tons for 2025, with 662 million tons produced in the first half of 2025 [4] - The expert anticipates a smaller volume impact from overproduction in the current cycle, at most 50% of what was seen in the previous cycles [4] Stock Implications - **Company Exposure**: - Among coal companies, Yankuang has the highest exposure to coking coal and coal spot sales, with 75% of its sales being spot sales, making it the most sensitive to coal price fluctuations [5] Additional Considerations - **Risks**: - Key risks include economic conditions, government policies affecting coal prices, and the balance of supply and demand in the coal sector [8] - Potential for higher-than-expected growth in fixed asset investment (FAI) in the coal sector and looser government policies could impact market dynamics [8] Conclusion - The coal sector in China is facing significant challenges with overproduction, but there are opportunities for price recovery and strategic adjustments in response to government policies. Investors should closely monitor these developments, particularly in relation to specific companies like Yankuang, which are more exposed to market fluctuations.

Financial Data and Key Metrics Changes - The company reported a GAAP net loss attributable to common stockholders of $27.6 million or $0.23 per diluted share, while generating adjusted EBITDA of $93 million [21][22] - Operating cash flow was $23 million, with cash at the end of the quarter amounting to $586 million and nearly $1 billion in liquidity [22][28] Business Line Data and Key Metrics Changes - The Seaborne Thermal segment recorded adjusted EBITDA of $33.5 million with 17% margins, despite a loss of 400,000 tons due to port congestion [22] - The Seaborne Metallurgical segment reported an adjusted EBITDA loss of $9.2 million, with 23% lower average realized prices year over year [23] - The US thermal mines generated $57 million of adjusted EBITDA, demonstrating stable free cash flows and low capital requirements [23] Market Data and Key Metrics Changes - In the US, coal fuel generation increased by 15% compared to 2024, driven by high natural gas prices and growing electricity demand [12] - Customer stockpiles decreased by 15 million tons, an 11% reduction from the previous year, indicating tightening supply and demand fundamentals [13] - Seaborne thermal coal markets are supported by hot summer weather in Asia, leading to reduced stockpiles and stronger bids [15] Company Strategy and Development Direction - The company is accelerating longwall operations at its Centurion mine, targeting startup in February 2026, reflecting strong execution across operations [5][6] - Recent US legislation is expected to provide significant benefits, including a reduction in federal royalty rates from 12.5% to 7%, anticipated to generate $15 million to $20 million in net benefits [8][9] - The company aims to manage the cyclicality of the market to capture outsized free cash flow when prices improve [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the US coal market, citing strong demand and supportive legislation [7][11] - The company noted that while the seaborne price environment remains challenging, it is well-positioned to navigate these conditions [20] - Management highlighted the importance of controlling costs and maintaining a strong balance sheet during cyclical downturns [20] Other Important Information - The company is in discussions regarding the acquisition of assets from Anglo American, with ongoing disagreements over the material adverse change (MAC) status of the Moranbah North mine [29][48] - The company is advancing its rare earth element evaluation program in the Powder River Basin, with initial studies indicating potential elevated levels of rare earth elements [81] Q&A Session Summary Question: Can you provide more details on the MAC situation with Anglo? - Management expressed confidence in their MAC position, citing significant monthly carrying costs and uncertainty regarding the mine's restart [35][36] Question: What is the status of discussions with Anglo? - Management confirmed ongoing respectful discussions but noted a fundamental disagreement over the impact of the MAC [47][48] Question: What should investors expect on August 19 regarding the MAC? - Management stated that the 90-day period to cure the MAC will conclude on that date, at which point they have the right to terminate the agreement [56] Question: Can you clarify the impact of the new royalty rate on costs? - The new royalty rate is included in the guidance, with expected benefits to costs in the second half of the year [68] Question: What is the expected benefit from the production tax credit for Shoal Creek? - The production tax credit is expected to provide savings of over $5 million annually, starting in 2026 [75] Question: How much cash is unrestricted and available to the company? - The company confirmed that the total cash of $586 million is unrestricted and fully available [89]