Coronado Global Resources (CRN)
Hi guys, wondering your views on CRN, particularly in the context of the Macro picture playing out.
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Answer
Hi Josh,
We like most people continue to believe that the world will need copious amounts of energy to fuel AI over the coming decades. Coal is in structural decline across developed markets and global demand growth is clearly slowing, however the fuel source is far from disappearing anytime soon. Even with coal’s share of global electricity generation expected to fall from ~35% to ~27% by 2030, it is still projected to remain the world’s second-largest power source over the period.
- The International Energy Agency (IEA) believes that solar, wind and nuclear will ultimately replace coal but at MM we can see the transition taking longer than many hope & expect.
For ASX investors, that suggests names like Whitehaven (WHC) and New Hope (NHC) likely have a longer earnings runway than the broader climate narrative implies, although the long-term direction remains negative.
However, Coronado is a different proposition, last month they delivered a weak first quarter — ROM production fell 22% to 5.4 Mt and saleable production dropped 30% to 3.0 Mt quarter-on-quarter, although management framed the miss as deliberate, with CEO Gerry Spindler describing a “structural operational and commercial reset” involving restructured mine plans, improved productivity and modified contractor arrangements. Capital discipline is now front and centre with no new large-scale programs planned following completion of the growth phase.
The met coal market itself is showing signs of life — prices recovered into 2026 with robust Indian demand providing the key demand driver — and CRN’s medium-term outlook remains constructive on the basis that steel production outside China gradually improves, trade barriers against cheap Chinese steel tighten, and Australian and US supply rationalisation supports pricing.
The classic “weak quarter by design, stronger half ahead” narrative, will need Q2 execution to determine whether the market believes it.
- The update led to a number of downgrades. We ultimately prefer the larger scale operators who are lower risk, and we see no reason to buy CRN ~25c before the next update.
