Felix Resources Sees Increased Demand From China and India

Australian coal miner Felix Resources beat its own guidance and market expectations for full-year coal production, the miner said today.

The miner said it was now shipping significant volumes coal to China and India.

Coal sales for the fourth quarter ended June 30 rose 17 per cent to 1.38 million metric tons from the previous year, taking full-year output to 4.77m tons, up 3 per cent on an annual comparison.

The full-year output was ahead of Felix's guidance for between 4.5m and 4.6m tons and Macquarie analyst Sophie Spartalis said it had exceeded market expectations.

"It looks very strong and underpins our view that it is our preferred stock in the space," she said.
Felix shipped its first load of coal to Chinese customers in the third quarter and managing director Brian Flannery said that China and India had emerged as significant new sources of demand in the fourth quarter.

Mr Flannery said more than 500,000 metric tons of coking coal had been shipped to the two Asian giants, mostly to China, as demand had softened from traditional customers such as Japan, South Korea and Taiwan.

"We saw additional demand from China and India, who took up the slack that we copped in the third quarter from our traditional customers not being able to lift all the coal," he told Dow Jones Newswires.

Lower freight rates have made Australian coal more attractive to Chinese buyers, but while some have questioned whether the demand will persist when freight rates recover, Mr Flannery said he expects that Chinese buyers are here to stay.

"I think they are going to be a long-term buyer of Australian coking coal products," he said.

Felix's fourth-quarter saleable coal production rose 20 per cent to 1.3m metric tons from a year earlier, and the miner said it had coal stockpiles at the end of the period of 899,000 tons, compared to 672,000 tons at the same time last year.

"Starting the new financial year with good stockpiles will enable the company to supply new markets, while meeting demand from our existing customers as their production profile increases with the economic upturn, which seems to be occurring in Asia," the miner said in a statement.

At June 30, Felix had $51.4m in debt and cash reserves of $340m. Felix said it had so far been funding most of construction activity on its new Moolarben thermal coal mine with cashflow.

Source: The Australian