Restrictive funding looms for thermal coal miners, Fitch Ratings says

Market funding is likely to be more restrictive than that for the energy transition.

Diversification will remain as a strategic priority for Asia Pacific coal miners as they seek to protect market access and improve earnings mix, according to a Fitch Ratings report.

The report expects merger and acquisition activity to continue, supported by media reports of mining assets coming to market.

“Issuers with balance-sheet capacity will be best placed to use acquisitions to reduce dependence on thermal coal and broaden commodity exposure”.

Moreover, the report noted that coal miners could face tighter long-term funding conditions if they remain heavily exposed to thermal coal.

Pressure is greatest for non-government-linked issuers with thermal coal exposure, as stakeholders continue to factor energy-transition risk into capital-allocation decisions.

“Energy security concerns still support existing producers, but they are unlikely to prevent a longer-term tightening in financing conditions as global demand begins to plateau”.

Further, market funding is likely to be more restrictive than that for energy transition commodities, with constraints showing up in both pricing and capital availability.