News

March 30, 2009

Anglo Pacific Offers A Generous Yield To Support Its Royalty Growth Strategy

By Charles Wyatt

Anglo Pacific Group is a unique animal, with a full listing in London. It has around £20 million in the kitty, no borrowing and it is a royalty company. There is nothing comparable to it over here, but in Canada royalty companies have the highest ratings as a flow of royalties has no geological or financial risks attached. As long as production continues, the royalties will flow in. Most of Anglo Pacific’s royalties at the moment come from coal mines in Queensland run by Rio Tinto and BHP Billiton and though the price of coking coal will be lower this year due to decreased demand from the steel companies of Asia, the Australian-US dollar exchange rate will make up a lot of the difference.

Nippon Steel, the largest steelmaker in Asia by output, has agreed to pay US$129 a metric ton for heavy-coking coal from Australia. This is a pretty drastic fall of around 57 per cent, but it has to be put in context. Back in 2007 the Japanese steel mills were paying fractionally under US100/metric tonne for coking coal from Australia. Last year it was the devastating floods in the Bowen Basin in Queensland which brought mining and transportation to a halt for a significant period which caused...