Geo Energy tips strong 2022 as Russia’s invasion of Ukraine boosts coal prices

Anthracite, a type of coal. Credit: Joey Harris on UnsplashAnthracite, a type of coal. Credit: Joey Harris on Unsplash

Geo Energy said Monday it expects to “perform well” in 2022 as coal prices have surged due to the geopolitical tensions caused by Russia’s invasion of Ukraine. 

For the first half of 2022, the company projects coal production of 5 million to 6 million tonnes, and revenue of more than US$400 million and earnings before interest, taxes, depreciation and amortisation (ebitda) of around US$200 million, according to a filing to SGX.

That compares with revenue of US$220.3 million in the first half of 2021 and ebitda of around US$77.5 million in the year-earlier period, the filing said.

The Newcastle coal price topped US$400 a tonne in response to sanctions on Russia, more than doubling since the start of the year, Geo Energy noted. 

“The impact of the Russia’s invasion of Ukraine and the sanctions imposed on Russia on the coal industry is expected to continue in the coming years ahead. The supply disruptions of coal in top coal exporters, including Russia, Australia and Indonesia have caused the surge in Asian thermal coal prices to a record high,” Tung Kum Hon, CEO and executive director of Geo Energy, said in the statement. 

“[Due to] the continued uncertainty around Australian coal ban by China, Indonesian miners continue to enjoy the high import demand from China. The sanctions on Russia meant that most banks have stopped issuing letters of credit and loading of Russian coal has almost stopped at the moment due to uncertainty of payment methods,” he said. 

See updates on Russia’s invasion of Ukraine