US-Australian mining firm Coronado Coal has negotiated an easing of conditions around $680mn of loan facilities, as it battles with lower prices and weaker demand for its coal because of the economic impact of Covid-19.

The firm’s lenders have waived financial covenants until the end of February 2021, to give it additional financial flexibility during what Coronado expects to be a sustained period of low prices.

“This waiver gives Coronado increased flexibility to respond to any further deterioration in global metallurgical coal markets and to manage the impact of fluctuations in demand and pricing,” said Coronado’s chief financial officer Ayten Saridas.

Coronado has already closed its three US coal mining operations and reported a loss of $8.9mn for January-March compared with a profit of $96.8mn in the same period last year. Its remaining operation is the 12.6mn t/yr capacity Curragh coking and thermal coal mine in Queensland where it has abandoned expansion plans because of the pandemic.

Curragh produces second-tier hard coking coal, with Coronado one of several non-premium metallurgical coal producers in Australia struggling to remain profitable in the current market conditions.

Argus assessed the hard mid-volatile coking coal price at $91.05/t fob Australia on 22 May, a small rebound from $88.90/t on 8 May but down from $146/t on 22 March and still close to the lowest level since August 2016. It assessed the premium hard low-volatile coking coal at $118.55/t fob Australia on 22 May, a slightly larger rebound from a recent low of $107/t on 4 May but down from $162.70/t on 22 March.

The discount for the non-premium hard coking coal had widened to $27.50/t or 23pc of the premium price on 22 May from $16.70/t or 10pc of the premium price on 22 March.

Coronado’s management said earlier this month that it believed it would be able to meet the needs of its existing operations and service its debts over the next 12 months, using cash generated and its available borrowing facilities. But it warned this is subject to continuing changing demand from customers, volatility in coal prices and uncertainty around the coronavirus. Other smaller mining firms in Australia may not have the lines of credit available to a larger operation such as Coronado, while some bigger producers have much more capacity to ride out a downturn.

Coal mining firms are starting to reduce production in Australia to try to cut costs and better match current demand conditions, with US energy firm Peabody looking to close its 2.5mn t/yr Wambo underground mine in New South Wales.