FORBES ASIA

ENERGY BOOST

14 | FORBES ASIA NOVEMBER 2016

T

urning an ugly duckling into

a beautiful swan is the stuf

of fairy tales, unless you’re

a company mining cok-

ing coal, which is needed

to produce steel, and have just seen the

price of your product more than double

in three months.

Winners from this reversal of fortune,

which has also seen a modest increase in

the price of thermal coal used to produce

electricity, include traditional mining

companies as well as Wesfarmers, an

Australian business better known as a

food and hardware retailer.

The return of coal as a profitable

business for Wesfarmers is a welcome

development but also one that brings

a slightly embarrassing accounting

question: Should last year’s $640 mil-

lion written of the value of its best coal

asset, the wholly-owned Curragh mine

in Central Queensland, be written back

this year?

That bookkeeping decision is for next

June, by which time a clearer picture

should have emerged about coal, argu-

ably the world’s least loved commodity

and the one seen as having the most

unattractive investment appeal given

government and environmental pressure

to cut carbon-fuel use.

But the rapid recovery of coal since

midyear is a reminder that it remains an

essential material in multiple industries,

and reduced production has led to an

inevitable price spike, which has seen

high-quality coking coal rocket from $

a ton to more than $200, while thermal

coal has risen by 20% to $70 per ton.

Rob Scott, the man in charge of coal

operations at Wesfarmers, says a number

of factors have driven the price up, start-

ing with its big dip earlier this year.

BIG SALE AT

WESFARMERS?

Onetime Aussie corporate star recovers on a coal

price spike, which may be its ticket out of mining.

BY TIM TREADGOLD

“It’s hard to predict the future,” says Richard

Goyder, CEO of Wesfarmers; the Curragh mine

(right) is the company’s prize coal asset.

PHILIP GOSTELOW/FAIRFAX MEDIA