Morningstar | New Hope is a financially conservative coal miner with relatively low operating costs, but it lacks a moat.
New Hope mines thermal coal from the wholly owned Acland in Southern Queensland and an 80% share of Bengalla in New South Wales. Cash costs are below the industry average cost and reserve life is beyond 10 years. Equity saleable coal production is about 12 million tonnes a year, almost all export: Acland via a 100%-owned port in Brisbane, and Bengalla via common user Hunter Valley infrastructure. Expansion at Acland from 5 million to 7.5 million tonnes is planned, along with a permitted life extension to 2029; however, an adverse Land Court decision in May 2017 raises the possibility that Acland's expansion won't go ahead and the mine will deplete in 2019. The balance sheet is strong with net cash. It is one of the better Australian coal miners, but high competition, fragmented supply, low industry barriers to entry and relatively high industry capital intensity make sustainable excess returns unlikely.New Hope operates four reportable segments: Coal mining in Queensland (including mining related exploration, development, production, processing, transportation, port operations and marketing); Coal mining in New South Wales (including mining production, processing, transportation and marketing); Oil and gas (including oil and gas related exploration, development, production and processing); and Treasury and investments (including cash, held to maturity investments and available for sale financial assets).
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