Kestrel / Coking coal

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An underground coal mine located in the Bowen Basin at Crinum, 51km north-east of Emerald in Central Queensland, Australia.




Coking coal


Kestrel Coal Pty Ltd



Royalty rate and type
7–15% GRR

Balance sheet classification
Investment property

Kestrel is an underground coal mine located in the Bowen Basin, Queensland, Australia. It is operated by EMR Capital and PT Adaro Energy (‘EMR’ and ‘Adaro’). The Group owns 50% of certain sub-stratum lands which, under Queensland law, entitle it to coal royalty receipts from the Kestrel mine.

The royalty rate to which the Group is presently entitled is prescribed by the Queensland Mineral Resources Regulations. These regulations currently stipulate that the basis of calculation is a six-tiered fixed percentage of the invoiced value of the coal as follows: 7% of the value up to and including A$100; 12.5% of the value over A$100 and up to and including A$150; 15% of the value over A$150 and up to and including A$175; 20% of the value over A$175 and up to and including A$225; 30% of the value over A$225 and up to and including A$300; and 40% thereafter

The Kestrel mine is operated by Kestrel Coal Resources (‘KCR’), a private joint venture between EMR Capital (an Australian private equity investment company) and Adaro Energy (a major coal mine operator and developer based in Indonesia).

Kestrel is an underground mine that uses longwall mining methods.  

Kestrel continues to move eastwards towards the boundary of Ecora’s private royalty land. We understand that by mid-2022 longwall panel LW410 had been completed and mining has moved to the LW411 panel. Guidance remains at 7.0Mt of saleable coal for 2022. Volumes within the Group’s land were 2.9Mt during H1 2022 and for the full year are expected to be around 5.0Mt.

In 2021 Kestrel produced its highest ever year of royalty related revenue, buoyed by strong coking coal prices during the second half of 2021 as stability returned to the market. This record was despite slightly lower volumes in 2021 due to the ongoing difficult mining conditions from known faulting resulting in sales from the Group’s private royalty lands decreasing by 7% from 5.6Mt in 2020 to 5.2Mt in 2021. Lower volumes in 2021 now look like being a positive, as these volumes are likely to be sold in a higher pricing environment in H1 2022 as the price of coking coal has increased by ~60% in the year to date backed by supply constraints at the beginning of the year and then the Russian invasion of Ukraine resulting in a rebasing of commodity price levels.

Similarly to 2020, there was a heavier weighting to Q4 sales reflecting the timing of the longwall changeovers, and together with the increase in the underlying coking coal price, this resulted in the single largest quarterly contribution from Kestrel in the Group’s history of $26m in Q4, compared to the $23m generated for the whole of 2020.
The coking coal price was subdued for most of 2020 and began 2021 in a similar fashion. This was very much against the grain of other commodities since the onset of the pandemic. The reason for this was largely due to a Chinese import ban on Australian coal, resulting in large volumes being diverted onto the seaborne market at a time when key import markets had shut down in efforts to contain COVID-19 outbreaks. Price pressure continued in the first half of 2021, averaging just $125/t. This position reversed suddenly and significantly from June 2021 onwards as Asian import markets reopened and the supply shock was absorbed.

This coincided with volumes from Kestrel increasing. Prices averaged $288/t in H2 2021 and ended the year at $340/t. Not only did this have the benefit of increasing the sales revenue to which the Group’s royalty is applied, but due to the price linked royalty rate there was also the additional benefit of the weighted average royalty rate increasing to 11.04% (2020: 8.69%).
The impact of the significant increase in price and the applicable royalty rate combined to produce record royalty revenue in FY 2021 of $48m (2020: $23m) and beat the previous record of $47m in 2019 – a year when record volumes of 6.3Mt were sold from within the Group’s private royalty land.

Key facts


The Kestrel royalty was independently valued at $84.5m as at 31 December 2021 and accounts for 13% of the Group’s total assets


We are expecting to see a similar volume level in FY 2022 to 2021 following the latest review of the mine plan by our independent consultants


An additional 1.3Mt of mining inventory expected to be within the Group’s private royalty land. This is due to the inclusion of a new longwall panel at the beginning of the 500 series panels