Japan’s Electric Power Development Co Ltd (J-Power) on Monday raised its net profit forecast by 61 per cent to a record 108 billion yen ($727 million) for the year to March 31 as soaring coal prices boosted gains from its stake in thermal coal mines in Australia.
Australia’s Newcastle thermal coal benchmark futures have more than doubled so far this year following sanctions by Western nations on Russia – the world’s third-largest exporter of coal – after its invasion of Ukraine.
J-Power increased its annual net profit estimate to 108 billion yen, a record since its listing in 2004, from its May forecast of 67 billion yen, thanks to a stronger performance of three Australian coal mines in which it owns stake.
Spot prices for Australian standard thermal coal are now estimated at $350 a tonne for 2022, up from its May assumption of $200 a tonne and the actual $100 a tonne in 2021, it said.
“We expect coal prices to stay at high levels given solid demand in Europe as an alternative fuel for natural gas,” J-Power President Toshifumi Watanabe told a news conference.
For Japan’s biggest coal-fired power generator and power wholesaler, higher electricity prices also contributed to its earnings in power business at home and abroad, including the United States and Thailand.
Asked whether J-Power would expand its overseas investment, Watanabe said it had no plans to buy more upstream coal assets, but intended to keep the existing stakes for the time being.
“We buy coal from the mines that we invest in under long-term contracts as we can’t just leave the fuel costs solely to market prices,” he said.
“We’ll continue to invest in the coal mines for a while, but we don’t intend to expand it,” he said, adding it was keen to invest in renewable energy assets overseas.
