We have initiated coverage on Bowen Coking Coal (ASX: BCB), highlighting the company’s ability to capitalise on the robust metallurgical coal price environment. It has acquired a suite of projects that will enable it to deliver coal into a buoyant market from as early as Q1 2022, and then ramp up to over 4mtpa of saleable product, with more than 90% of revenue from steel making coal initially, and 70% longer-term.
Until there is massive investment in new steelmaking capacity that doesn’t use coal, coal using steelmaking must continue. On the International Energy Authority’s roadmap to net zero, the steel industry is still expected to consume 540Mtpa of coking coal by 2050, so on that forecast, which represents a realistic worst case for coking coal, Bowen will have a market to contest for a period well beyond its reserve life. We believe Australia will continue to be a highly competitive place to produce coal.
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