This week in coal: New Hope directors buy the dip, India ramps up coal consumption

Fri 03 Jun 22, 10:05am (AEST)
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Key Points

  • New Hope directors load up after the company's stock dipped post earnings
  • Origin downgrades its earnings after being forced to buy coal at spot prices
  • India is burning more coal to power the nation through a deadly heatwave

The fossil fuel shortage has made it to mainstream media after an Australia energy regulator warned several industry operators of potential gas and power shortages.

The Australian Energy Market Operator (AEMO) said that Victoria, South Australia and Tasman face potential gas shortages, and power supplies in NSW and Queensland will be stretched, The Australian reported.

Coal prices were rather unchanged this week following a V-shaped rebound towards record highs. Likewise, several ASX-listed coal stocks took a breather after several months of share price gains.

NCF1! 2022-06-03 09-43-09
Newcastle Coal Futures (Source: TradingView)

This week in coal

New Hope directors load up

New Hope (ASX: NHC) directors bought the dip following a mixed half-year result last week.

Weather and covid-related labour shortages weighed on the company's coal output, triggering a -7.8% selloff on the day of the announcement.

A few days later, three New Hope executives loaded up, including:

  • Non-Exec Chairman Robert Dobson Millner bought 200,000 shares ($734,618)

  • Non-Exec Director Thomas Millner bought 200,000 shares at $3.67 ($734,618)

  • Non-Exec Director Jacqueline McGill bought 20,000 shares around $3.65 ($73,100)

2022-06-03 09 58 38-New Hope Corporation Ltd (ASX NHC) Share Price - Market Index
New Hope share price chart

Whitehaven is a money printer

Goldman Sachs projects Whitehaven Coal (ASX: WHC) to pay 58 cents per share in total dividends for FY22, the Australian Financial Review reported. The projected dividend represents an outsized 11% dividend yield based on a share price of $5.25.

The investment bank expects Whitehaven to generate free cashflow yields of 46%.

Origin Energy calls for more coal

Origin Energy (ASX: ORG) - the owner of Australia’s largest coal-fired generator - dipped -13.7% on Wednesday after downgrading its FY22 earnings and withdrawing its outlook for FY23.

Origin’s earnings took a massive blow due to the under-delivery of contracted coal to the Eraring Power Station. Replacement coal purchases were at “significantly higher prices” and further “exacerbated by coal delivery constraints via rail.”

Coal keeping India cool amid deadly heatwave

A severe heatwave and record electricity consumption has put India’s power grid at risk, forcing the country to reopen coal mines. 

India reported a record green energy output in May, up to 14.1% compared to 10.2% in April.

However, coal consumption was running even harder, up 26.2% in May, on the back of a 23.5% increase in overall power demand. 

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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