Business North March 2021

40 | Glut of coal on market hits export prices Karen Phelps Bathurst supplies coking coal, which is used as a raw ingredient in the steel manufacturing process to India, Japan, Korea and Australia. MINING Bathurst Resources C ovid-19 did not have as much of an impact on the operations of Bathurst Resources as the on-going dispute between China and Australia. This has resulted in an oversupply of coal in the international seaborne market, says Bathurst Resources general manager of mar- keting logistics Sam Johnstone. “We don’t export to China currently so we have not been exposed from a coal supply perspective but it has affected international coal prices for around eight months whereas the direct effects of Covid-19 on pricing only lasted a quarter. Domestic markets have remained strong.” Sam says that key markets such as India and Japan have recovered extremely well from the economic effects of Covid-19, which has seen the fundamentals of steel manufacture remain positive. Bathurst Resources supplies coking coal, which is used as a raw ingredient in the steel manufacturing process to India, Japan, Korea and Australia. The level four lockdown in New Zealand in 2020 meant Bathurst Resources could not ex- port two shipments of coal to key markets, as it was not deemed an essential service while the domestic mines continued to operate as an essential service. After that it was essentially business as usu- al although has entailed working closely with customers to help them manage the impacts on their businesses, says Sam. “We have long term contracts with our cus- tomers so we were relatively isolated from any negative effects in that sense. “Long term trusted relationships are vital in situations such as Covid-19 and we’ve worked hard to help our customers, accommodating changes in their shipping and production plans,” he says. However the longer the pandemic goes on the harder it has been to maintain relation- ships with video conferencing replacing the usual face to face interaction. “The lack of social interaction does mat- ter. For example without being able to visit customers its been harder for us to reinforce the value our high quality coal product has for their business and the worth it brings down the line compared with inferior, cheaper prod- uct,” he says. “This has been complicated by over supply in the market due to the tension between China and Australia, which has seen larger coal producers selling at below market value to move product putting pressure on smaller suppliers through reductions in Index pricing.” Sam says millions of tonnes of coal has been sitting in Chinese waters unable to offload and China has instead been sourcing its coal domestically and from neighbouring Russia and Mongolia and from across the Atlantic from Canada and the US. “They’ve had to pay higher prices though and there have been stories of Chinese cities having to turn their lights out at night because there is not enough thermal coal to meet electricity demand internally. “So it can only be a matter of time before this situation resolves.” As global prices have dropped by nearly a third over the past year, maintaining cash has been a pivotal strategic focus while the company weathers the disruption caused by the direct impact on export margins. Strict capital expenditure limits have been put in place, and timing of key capital spend has been moved where possible to align with when Bathurst Resources expects export pricing to have recovered. And signs of recov- ery are already happening, says Sam, which means Bathurst Resources has to again ramp up production. He acknowledges the key role Bathurst Re- sources’ staff have played during the pandem- ic: “Our people have been fantastic, coping well with all the changes and uncertainty Covid-19 has thrown at the world. “They have given everything they could to the business, helping it to continue to meet customers’ needs.” For the last 22 years, we have specialized in coal mine facility (opencast and underground) related cleaning. As a local family owned and operated business with a small team, we are able to concentrate on friendly quality service which facilitates honesty and reliablilty. All of our staff enjoy making a difference to our clients day. If we can leave them smiling, then we have achieved our goal! We are grateful to be able to support our clients in providing much needed energy at this time. 46 Hartis Ave, Huntly 3700 | 07 828 9399 | 021 0844 9966 | 021 0817 0593 terracat.co.nz 0800 93 39 39 DELIVERING THE MOST EFFICIENT COST-PER-TONNE SOLUTIONS TERRA CAT PROUDLY SUPPORTS BATHURST RESOURCES “Long term trusted relationships are vital in situations such as Covid-19 and we’ve worked hard to help our customers, accommodating changes in their shipping and production plans.”