Winsway marks 3rd year of losses in 2014 amid depressed coal market

Hong Kong-listed Winsway Enterprises remained in the red for a third consecutive year in 2014 amid a persistently depressed coking coal market.

Paragraph entered by Atlantic migration, in order for SteelFirst articles to display correctly on Metal Bulletin.

The company – previously known as Winsway Coking Coal – recorded a negative adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of HK$318 million ($41 million) for last year, according to its latest annual report released late on Thursday March 26.

It recorded a loss of HK$615 million ($79 million) in 2012 and HK$396 million ($51 million) in 2013.

Its adjusted Ebitda regarded “interest” as including investment income and “depreciation and amortisation” as including impairment losses on non-current assets, according to the report.

“Coking coal prices remained depressed particularly throughout the year. Market prospects remain bearish due to the ongoing oversupply and declining demand in large part associated with slowing growth in [China],” Winsway’s chairman Wang Xingchun said.

He also pointed out that Chinese government’s measures to reduce overcapacity in the steel industry further weakened demand for coking coal last year.

Winsway procured a total of 0.99 million tonnes of Mongolian coal in 2014, down from 5.12 million tonnes a year earlier. Its procurement of seaborne materials fell 3% to 6.48 million tonnes last year.

The company attributed the sharp drop in the procurement of Mongolian coal to higher transportation costs of such materials and falling prices of seaborne products.

Winsway sold Mongolian coal at an average price of HK$671 ($87) per tonne during the twelve-month period, while its average price for seaborne coal was HK$846 ($109) per tonne.

These are lower compared with 2013’s HK$750 ($97) and HK$1,085 ($140) per tonne, respectively.

In June 2014, Winsway decided to dispose of its business of developing coal mills and producing coking coal, a move that included the sale of part or all of its 60% interest in Canadian coal producer Grande Cache Coal Corp (GCC).

In October, the company entered into a non-legally binding memorandum of understanding with Hong Kong-listed Up Energy on the potential sale of a 42.74% stake in GCC for $1. The deal is yet to be completed, Winsway said.

Winsway recorded a HK$5.15 billion ($664 million) impairment charge on its interest in GCC for 2014.

Grande Cache Coal is situated in the Smoky River Coalfield in the foothills of the Rocky Mountains in Alberta, western Canada.

What to read next
Any bolstering effect on US ferrous scrap exports from the up-month in February’s domestic trade will be tempered in the immediate aftermath of two earthquakes in Turkey — the country’s largest importing region — on Monday, February 6
Steel trading and production have come to a halt in the eastern Turkish region of Iskenderun following a devastating earthquake that hit the region on Monday February 6 and put mills in the area under force majeure, sources told Fastmarkets on Tuesday
A 120-day closure of four Illinois dams scheduled for 2023 will disrupt barge shipments and have potentially both negative and positive impacts on scrap and finished steel products from Canada to Texas
Market participants are cautiously optimistic about a rebound in iron ore concentrate premiums, with steelmakers around the world set to ramp-up production in line with an anticipated increase in demand for steel products, Fastmarkets understands
General Motors (GM) is investing $650 million to develop the Thacker Pass mine in Nevada, the largest known source of lithium in the US and the third largest in the world
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
Proceed