SOUTHGOBI POSTS LOSS, PULLS PRODUCTION FORECAST
Coal miner SouthGobi Resources Ltd reported a second-quarter loss and withdrew its full-year forecast for semi-soft coking coal, citing weak demand in China.
SouthGobi shares fell as much as 5 percent to C$1.14 on the Toronto Stock Exchange on Monday.
The withdrawal of the forecast for semi-soft coking coal, a variety of coal used to make steel, comes five months after the company set the target at 3.2 million tonnes.
SouthGobi said the timing of any recovery next year remained uncertain and was dependent on the Chinese economy, where demand and prices for coking coal have been weak.
The company’s flagship Ovoot Tolgoi mine is in Mongolia, which neighbors China. The mine produces and sells coal to customers in China.
Certain coal price indices in China have reached four-year lows and coal consumption and production in regions close to the Mongolian border have dropped significantly year-on-year, SouthGobi said in a statement.
Economic activity after transition in China’s leadership has been slower than expected, the company said.
China’s new leader President Xi Jinping’s appointment as Communist Party chief in a once-in-a-decade leadership change last November had triggered hope of political reform.
SouthGobi said average realized selling prices fell 77 percent to $14.40 per tonne in the second quarter.
SouthGobi posted a net loss of $33.7 million in the second quarter, compared with a net income of $237,000, a year earlier.
Revenue slumped to $374,000 from $8.4 million.
The company produced 0.17 million tonnes of raw coal, compared with 0.27 million tonnes, a year earlier.
The company’s majority shareholder, Turquoise Hill Resources Ltd, formerly Ivanhoe Mines Ltd, is majority-owned by Rio Tinto.
SouthGobi shares fell as much as 5 percent to C$1.14 on the Toronto Stock Exchange on Monday.
The withdrawal of the forecast for semi-soft coking coal, a variety of coal used to make steel, comes five months after the company set the target at 3.2 million tonnes.
SouthGobi said the timing of any recovery next year remained uncertain and was dependent on the Chinese economy, where demand and prices for coking coal have been weak.
The company’s flagship Ovoot Tolgoi mine is in Mongolia, which neighbors China. The mine produces and sells coal to customers in China.
Certain coal price indices in China have reached four-year lows and coal consumption and production in regions close to the Mongolian border have dropped significantly year-on-year, SouthGobi said in a statement.
Economic activity after transition in China’s leadership has been slower than expected, the company said.
China’s new leader President Xi Jinping’s appointment as Communist Party chief in a once-in-a-decade leadership change last November had triggered hope of political reform.
SouthGobi said average realized selling prices fell 77 percent to $14.40 per tonne in the second quarter.
SouthGobi posted a net loss of $33.7 million in the second quarter, compared with a net income of $237,000, a year earlier.
Revenue slumped to $374,000 from $8.4 million.
The company produced 0.17 million tonnes of raw coal, compared with 0.27 million tonnes, a year earlier.
The company’s majority shareholder, Turquoise Hill Resources Ltd, formerly Ivanhoe Mines Ltd, is majority-owned by Rio Tinto.
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