US-Australian coal producer Coronado is holding talks with Australian state-owned electricity generator Stanwell for the latter to provide A$150mn ($98mn) in exchange for thermal coal supply, supporting Coronado's cash-strapped coking coal business.

The negotiations are incomplete and confidential, Coronado told investors on 5 June. There is no guarantee that the two groups will reach an agreement, it added.

Coronado supplies 3mn t/yr of thermal coal to the 1460MW Stanwell Power Station, under a deal that is scheduled to end in the 2026-27 financial year (July-June).

Coronado's Curragh mine in Queensland mostly produces coking coal but it also produces some thermal coal. The firm's saleable production fell by 3.6pc in 2024, although sales still increased year on year. Coronado exported 10.2mn t of hard coking coal from Curragh in 2024, up from 9.9mn t in 2023.

But the company is facing cash availability difficulties, because of a fall in coking coal prices. Argus' metallurgical coal premium hard low-volatile fob Australia price fell to $186.70/t on 5 June from $256.15/t on 7 June 2024.

US credit ratings agency Fitch downgraded Coronado's credit rating from a B to a CCC+ on 14 May, because of expectations that its cash position will weaken without additional funding. But Coronado's cash position could improve soon, despite continued price weakness. The company started talks with Queensland's state government about possible mineral royalty relief in the first quarter, it told investors on 30 April. It also secured a A$150mn loan facility from lenders on 4 June, backed by coal inventories.

By Avinash Govind