Coronado (ASX:CRN): Down 85% in a year as metallurgical coal prices tumble, does it have a future?

Coronado Global Resources (ASX:CRN) is a producer and seller of metallurgical coal (also known as coking coal). While thermal coal – the other kind of coal investors hear of – is used in electricity generation, metallurgical coal is used in steel production. Coronado has fallen 85% in the last 12 months.

It is difficult to put it down to Trump’s tariffs because it has operations in the USA. In our view it is due to three reasons. The first two have to do with metallurgical coal: where prices are going in the short-term, and does it even have a future in a world of ‘Net Zero’? Metallurgical prices peaked at US$670/t in 2022 but are now US$183/t – a decline of over 70%.

The third is the company’s financial position. Coronado may have declined even without the third reason, but the third is an additional reason for investors to panic.

Recap of Coronado Global Resources (ASX:CRN)

Coronado has two operations in the USA, both in the Central Appalachian region in the Virginias (i.e. Virginia and West Virginia). One of these is Logan and it has Resources of 248Mt and 135Mt Reserves. It has been operating since 2005 and has been owned by this company since 2014.

The other is Buchanan which began operating in 1983 and changed hands in 2016. It has 203Mt Resources and 154Mt Reserves. Coal from these markets are sold in North America and to other nations in Europe, Asia and South America.

The Australian operations are in Queensland. It has the Curragh complex that is in Central Queensland’s Bowen Basin – one of the largest coal basins on the planet. It has 936Mt Resources and 290Mt Reserves and consists of two open cut mines along with a pilot gas project.

There is both met coal and thermal coal from here with the former exported to steel markets while the latter is sold to Stanwell Corporation to sell electricity to the Queensland market.

Coronado is not in the best of shape

Cast your mind back to September 2023. Billionaire Czech businessman Pavel Tykac wanted to buy 51% of the company for $1.5bn. But Coronado declined the deal on the exact same day he was ordered to sell his stake in a Queensland coal project. The then Labor government was concerned about private operators following one explosion at another power plant blamed on poor management at that plant.

At the time, this didn’t appear to be a problem as the company seemed in decent shape. The company made a US$156.1m profit and US$2.9bn revenue in 2023. Yes, this was down from, US$771.1m and US$3.6bn in 2022, but this was inflated by surging metallurgical coal prices.

But in 2024, Coronado made $2.5bn revenue and a $108.9m loss. The company tried to spin it saying it was the third highest revenue figure ever and that it had managed to reduce some of its costs. The operating cost per tonne sold was $7m lower than the prior year – thanks to a 30% reduction in headcount at its Australian operations. The only guidance given for 2025 were production and cost figures, but no revenue or profit figures.

Coronado has copped many blows in 2025 including being removed from the ASX 200 (leading to institutional selling) and Trump’s tariffs. Trump’s plan is to take America back to the day when it dominated global coal production. What’ll happen if this eventuates? Over supply and lower prices, inevitably. But most importantly, China has been agressive in cutting its steelmaking (it is currently at seven year lows).

In trouble

By June 2025, the company could no longer shy away from the fact that the sector was in trouble. Despite trying to argue ‘long-term fundamentals for steelmaking coal are intact’, Chairman Gerry Spindler admitted to investors that times were, ‘among the most challenging we’ve seen in many years’.

Still he put the decline down to the sector mostly, arguing it did not reflect the full value or potential of its assets, plus that things would turn. OK, but no one knows when.

During July, the company has been in the headlines for having its credit rating downgraded by S&P. Talk about poor timing…it was looking to raise $1bn in debt financing. S&P publicly warned it would burn cash if coal kept lingering below US$200 per tonne.

To be fair, this company is not the only coal miner to cop a downgrade or be struggling with money (Bowen Coking Coal has been another). Plus, this downgrade doesn’t mean it’ll never be able to secure finance. But of course, that task is harder now. It can only raise so much of that by selling a stake in some of its assets – like Curragh as it is trying to do.

Conclusion

At least Coronado hasn’t gone under, but that’s just about the only positive thing you can say right now. Investors should get out while they can, in our view.

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