SINGAPORE (June 19): The Covid-19 outbreak has caused already soft coal prices to weaken further as demand for energy drops. With prices now hovering at around US$53 ($73.88) per tonnne, coal producers face further strain. “Coal prices are obviously dependent on demand-supply dynamics,” Geo Energy Resources CEO Tung Kum Hon told The Edge Singapore in a recent interview. While he is betting on coal prices moving over US$30 per tonne in 2021, it may take some time before prices recover to 2018 levels of US$45 per tonne.

Given this “depressed market” condition, Geo Energy’s priority is to keep a tight rein on its costs. It has trimmed its production costs from US$30.24 per tonne in 1QFY2019 ended March to US$26.86 per in 1QFY2020, as it cut back production and paid lower rates to its contractors. Tung says the coal industry is seeing shorter cycles and coupled with the Covid-19 fallout, Geo Energy needs “a new level of flexibility and responsiveness” in managing costs.

Deal failure, new acquisitions

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