Wesfarmers boss predicts greater coal price pain

Wesfarmers’ chief executive Richard Goyder is predicting further falls in coal prices for the June quarter, but says the group is in the commodity for the long run after posting a strong March quarter production result for its two Australian coal mines, according to the Australian Financial Review.

A reduction in metallurgical coal pricing would be expected, Goyder said, as the group was finalising its contract pricing for the June quarter.

“A majority of producers would find it very financially challenging at current pricing.”

While some coal miners – both in Australia and abroad – might not survive the current conditions, as a low-cost producer Wesfarmers could afford to “batten down the hatches” and wait it out, he said.

Though he was positive that at current coal prices the group could continue to export above cost, Wesfarmers ran its supply into the domestic coal market at a loss.

BHP and AGL still expanding fossil fuel holdings

BHP Billiton, India's Adani Enterprises and AGL Energy are among listed companies expanding fossil fuel holdings despite the risk that global efforts to limit climate change will strand the bulk of their reserves, according to the Sydney Morning Herald.

The Carbon Underground 200 list of the largest public coal, oil and gas companies found they increased potential total greenhouse gas emissions from proven reserves by 8.4% between 2010 and November 2013.

Fossil Free Indexes compared those total assets with estimated holdings by state-owned companies, such as Saudi Aramco, and estimates by the International Energy Agency of how much carbon could be emitted while maintaining a two-in-three chance of limiting temperature rises to 2C.

“Adjusted for their share of the emissions embedded in global reserves, the carbon content of reserves held by the Carbon Underground 200 exceed the carbon budget by over 400%,” the report said.

Iron ore drops again as China credit crackdown continues

China’s continuing efforts to crack down on the country’s shadow banking sector have pushed the iron ore price to a seven-week low, but seasonal demand is expected to hold the price steady until the second half of 2014, according to the Sydney Morning Herald.

Iron ore is now trading at $US108.60 per tonne, its lowest point in seven weeks.

The raw metal has been heavily involved in financing deals in China, which has caused significant volatility in 2014, as the Chinese government attempts to curb the country’s shadow banking sector.

The China Banking Regulator Commission (CBRC) has argued for an investigation into iron ore financing deals. It is rumoured that banks and local regulators are due to hand in detailed reports on April 30, leading to increased volatility over the past week.