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What boosted the Whitehaven coal share price?

Friday, April 1st, 2022

Two fists connect in a surge of power, indicating strong share price growth or new partnerships for ASC mining and resource companies

Whitehaven Coal Ltd is among many ASX energy shares enjoying a strong run in 2022 due to interrupted global supply chains and the impact of the Russian invasion of Ukraine.

The S&P/ASX 200 Energy Index (ASX: XEJ) is up by almost 22% year to date. The Whitehaven Coal share price has outperformed the index by a mile, up by 51% over the same timeframe.

Fellow ASX energy shares that have picked up major ground in 2022 include Woodside Petroleum Limited , up 43%, and Santos Ltd and Beach Energy Ltd — both up by 19%.

Today, the Whitehaven Coal share price finished up 0.48% to $4.17 amid news that the NSW Independent Planning Commission has conditionally approved expansion plans for one of the company’s mines.

Narrabri mine expansion

The Narrabri Mine, located in the NSW north-west, is Whitehaven Coal’s only underground mine. It has been operating since 2012. It employs 500 people, mainly local residents. Whitehaven Coal has previously received approval to dig up 11 million tonnes of high-quality thermal coal per annum until 2031.

Now, Whitehaven Coal wants to extend the mine. In early 2021, the NSW Department of Planning and Environment commenced a whole-of-government assessment of the project. The department concluded its review in January and recommended approval for the expansion. However, the state’s planning minister asked the commission to conduct a public hearing before making a final decision on their behalf.

The expansion involves extending longwall operations to the south of the mine and extracting an extra 82 million tonnes of coal. Dubbed the Stage 3 Extension Project, it will extend the life of the mine to 2044.

Today, a commission panel announced it has given consent but is imposing 152 conditions. These include performance measures to reduce the intensity of Scope 1 and Scope 2 greenhouse gas emissions.

Whitehaven Coal will also have to complete an Emissions Minimisation Plan. The plan will investigate and implement innovative, economically-feasible ways to further cut Scope 1 emissions through technology.

Why the expansion got approved

In its Statement of Reasons for Decision, the commission said the approval was partly “in recognition of the importance of the continuation of the extraction and exportation of coal to the NSW economy”.

The commission said:

The community raised concerns in submissions … regarding subsidence, water, greenhouse gas emissions, biodiversity, noise and Aboriginal cultural heritage. The Commission also received submissions in support of the Application, citing its positive social and economic benefits through the provision of employment for the local area and region.

The Commission finds that, on balance, the Project would achieve an appropriate balance between relevant environmental, economic and social considerations.

What else is happening at Whitehaven?

Whitehaven Coal updated the market today on its buyback of up to 10% of its shares.

Whitehaven said: “… The company’s on market share buy-back of up to 10% of shares and capped
at $400 million over a twelve-month period is progressing well. The Company is currently in a blackout period ahead of the release of its March Quarter Production Report scheduled for 20 April, after which Whitehaven’s share buy-back activities are able to re-commence.”

Whitehaven Coal began purchasing its own shares on 8 March. It spent $67 million acquiring 16.8 million shares over the month. This represents 16% of the maximum 103 million shares that it may acquire.

Whitehaven Coal share price snapshot

Whitehaven Coal shares are up 134% on the ASX over the past 12 months. For perspective, the S&P/ASX 200 Index (ASX: XJO) has risen by 8.8% over the same timeframe.

Should you invest $1,000 in Whitehaven Coal right now?

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