Peabody Energy Corporation (BTU) Earnings Call Transcript & Summary

Good day, and welcome to the Peabody Q4 2024 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Vic Svec. Please go ahead.

Well, thank you, operator, and good morning, everyone. Thank you all for joining today to take part in Peabody's fourth quarter conference call. Remarks today will be from Peabody's President and CEO, Jim Grech; CFO, Mark Spurbeck; and our Chief Marketing Officer, Malcolm Roberts. Following the remarks, of course, we'll open up the call to questions. Now we do have some forward-looking statement information today. And you'll find our statements on forward-looking info in the release. We do encourage you to consider the risk factors that we reference here, along with our public filings with the SEC. And I'll now turn the call over to Jim.

Thanks, Vic, and good morning, everyone. Peabody had a strong finish to 2024, marked by a highly productive quarter that sets the foundation for multiple years of substantial growth and value creation. Consider that in the past 3 months, we turned in a solid fourth quarter results even in the face of some geologic and pricing challenges, shipped the first coal to market from the Centurion mine, agreed to buy multiple premium hard coking coal mines from Anglo American, entered into an agreement with clean energy leader, RWE to develop renewable energy projects on reclaimed mine lands. Completed a year in which we returned $221 million to shareholders while continuing to reinvest in the business. Set a new 140-plus year company record for lowest accident rates, we claimed 70% more land than we disturbed while freeing up more than $100 million in reclamation bonding obligations and again achieved the top rating for governance by ratings firm ISS. We know of no other coal company that can cite that record of recent positive momentum. And while it is an impressive list by no means can we say that we're hitting on all cylinders yet. Case in point, Seaborne met coal prices are up 45% in the past year as we move through the low end of the cycle with expectations of improvement later in the year. U.S. coal demand hasn't yet caught the uplift that can be expected from growing domestic power demand, which we believe will occur over time. And we've worked through geologic challenges at our 20-mile mine with increased production just now taking hold. I'll spend a moment updating you on our major actions to transform Peabody into a company focused on serving growing met coal demands at Asian steel mills. Late in the quarter, Peabody shipped its first coal from the Centurion mine to a Southeast Asian steel mill. We now have four continuous miners in coal and Centurion Southern District and expect two continuous miners to enter coal in the Northern District in the third quarter. For 2025, we're looking at 0.5 million tons of development coal from Centurion, ahead of a projected 3.5 million tons in 2026 when longwall production in the Southern District begins. I'm also pleased to report that Peabody's planned acquisition of premium hard coking coal mines in Australia from Anglo American is progressing well. Since signing the agreement, we've been active on a number of fronts. We've received regulatory approvals from several jurisdictions, advance the contractual preemption process, started the permanent financing process and have begun in-depth integration planning. We're now targeting completion of the acquisition next quarter, obviously subject to clearing the closing conditions. I'll remind investors of the many strategic and financial aspects that make this transaction so appealing. First of all, this positions Peabody as a leading seaborne met coal supplier. On a pro forma basis, we expect 3/4 of Peabody's EBITDA in 2026 to come from metallurgical coal. This is also an acquisition that we believe is accretive to cash flows across all periods. The transaction boosts both coking coal quality, improving realizations and mine lives with averages of more than 20 years. Geographically, we will have the logistics advantage of having most of our met coal production and sales in the Pacific Rim, as global steel production continues to shift to Asia. We are highly confident that there are some $100 million a year in synergies to be captured post acquisition. Finally, we believe that the strong cash flows of the acquired assets will accommodate continued shareholder returns and lead to a favorable re-rating of the stock. From the acquired mines, we're projecting 11.3 million tonnes of saleable production in our first full year of ownership in 2026. Since our November announcement, our confidence in those numbers has only grown. For example, a number of operational improvements are being implemented by Anglo and as we speak, the new longwall at Moranbah North is being ordered. In a moment, I'll turn the call over to Malcolm Roberts, our Chief Marketing Officer, to talk through the global coal markets. As a lead-in, I would note that the U.S. is experiencing the strongest confluence of policy and commercial tailwinds that we've seen in more than 2 decades. Consider these facts. First of all, after some 15 years of flat electricity load growth in the U.S. utility experts and industry observers are now expecting 2% to 3% annual load growth in coming years due to data centers and increased electrification. Second, following multiple years of premature retirements and coal fuel generation, we've now seen deferrals and retirement plans, extending the lives of 51 coal units in 17 states, constituting 26 gigawatts of power enough to power 20 million homes. Third, we have a new administration that is locally pro coal and is already taking steps to facilitate common sense policies to assist our utility customers while also encouraging greater exports of LNG to Europe. Fourth, we are seeing a favorable environment to increase utilization of existing coal plants, which ran at 72% of capacity on average early last decade. But most recently, we're only averaging 42% utilization. And finally, we have new entrants into merchant power generation and look to change up the dynamics of recent years. Peabody itself has been approached by household name private equity funds that are looking for creative means to match up reliable, low-cost coal plants with growing data center needs or backfill generation to feed a capacity-hungry grid. Having covered U.S. markets, Malcolm, I'll ask you to complete the discussion with seaborne supply demand dynamics.

Thanks, Jim. You've given a good overview of U.S. policy and market trends. Those trends along with the strong winter weather have drawn down stockpiles at our mines and at our customers. Our U.S. thermal coal production is largely spoken for during the first half of the year, and we expect to see our customer base come to market for additional volumes as the year progresses. In our discussions with customers, they are anecdotally confirming that the narrative of data centers driving electricity demand growth is real. Now I'll turn to what we're seeing in global seaborne markets, starting with met coal. Near-term seaborne met markets remain well supplied as the Chinese domestic economy remains soft. China's apparent steel consumption declined by approximately 5% in 2024 to just under 900 million tons, leading to net steel exports to increase by 30% to the highest level since 2015. Another way of viewing steel from our perspective is its refined metallurgical coal. So China's strong steel exports translated into otherwise weaker met coal demand elsewhere. Steel production outside of China has remained largely steady as a result of growth in India. However, margins have become challenged. Like most observers, we don't view China as the growth engine for met coal demand growth over time, though. That role is likely to be played by India. And in 2025, we expected an 8% increase in Indian steel production underwritten by several new blast furnaces coming online. From a supply perspective, we're seeing some tightness in the premium low-vol PCI segment. In the coking coal segment, there have been notable disruptions in high-vol coking coal production, including mine fires and bankruptcies. That is partially offsetting some of the easing of demand from Atlantic buyers. Longer term, we anticipate the demand and supply fundamentals to drive increasing price spreads between premium hard coking coals and lesser grades which, of course, is the thesis underpinning the development of the Centurion mine and our premium hard coking coal acquisition. Turning to seaborne thermal markets. To wrap up 2024, China increased total coal imports to 543 million metric tons, a 14.4% increase from 2023. China's imports of Australian coal increased by over 50% during the same period. The increase in Chinese imports was the key contributor to global seaborne demand growth during 2024. Within the global seaborne thermal market, we've seen a mix in the Northern Hemisphere of colder weather in the Atlantic and warmer winter weather in Asia. Recent demand for imports have been mixed with stockpiles in jurisdictions such as China and India higher than normal. Attention is now turning to industrial activity following Lunar New Year breaks in China and Asia more generally in coming weeks. As the year progresses, we'll see how Europe restocking of natural gas may influence LNG pricing and the relative competitiveness of Australian high-energy coal. We've also observed how recently announced trade tariffs influenced seaborne trade flows as relative price competitiveness of U.S. coal exports to China are likely impacted. That's a brief review of the coal market dynamics. I'll leave it there for now and welcome the opportunity to provide further details in Q&A. And now I'll turn the call over to Mark.

Thanks, Malcolm, and good morning. Jim noted our strong finish to the year, and I'll provide some additional color. In the fourth quarter, we recorded net income attributable to common stockholders of $31 million or $0.25 per diluted share and adjusted EBITDA of $177 million. The company generated $121 million of operating cash flow from continuing operations. This contributed to a full year net income attributable to common stockholders of $371 million and adjusted EBITDA of $872 million. The company generated $613 million of operating cash flow from continuing operations. In 2024, we returned $221 million to shareholders through share repurchases and dividends and advanced Centurion through its first coal shipment in the fourth quarter. I would note, since restarting our shareholder return program, we've returned $600 million to shareholders and invested $500 million in the development and expansion of Centurion. At December 31, Peabody had $700 million of cash and available liquidity of $1.1 billion, and our reclamation obligations remain fully funded. We believe this financial strength and balanced capital allocation will best reward our shareholders over time. They also position Peabody for the Anglo acquisition, marking a deliberate progression in Peabody's financial and strategic transformation. Looking ahead, Peabody's capital allocation will be heavily shaped by our pending acquisition. As a reminder, we have structured the transaction with a combination of upfront deferred and contingent payments. This is all designed to enable the anticipated cash flows from the acquired assets to self-fund the transaction, and set up a higher baseline for sustainable shareholder returns. Let's now review the segment results. In the fourth quarter, seaborne thermal recorded $112 million of adjusted EBITDA and margins of 36%. Tons shipped were ahead of expectations, and that was primarily due to higher-than-anticipated production at Wambo Underground. Seaborne thermal cost per ton remained stable with the third quarter, beating expectations. For the full year, the Seaborne Thermal segment reported $430 million of adjusted EBITDA. Shipments increased nearly 1 million tons from 2023 and costs were down about $1 per ton, resulting in EBITDA margins of 35%. The segment generated over $350 million of free cash flow. The Seaborne Met segment reported $23 million of adjusted EBITDA in the fourth quarter. Shipments increased 500,000 tons compared to the third quarter, in line with expectations. Cost per ton improved by a better-than-expected 12% due to higher-than-anticipated production at Shoal Creek as well as a weaker Australian dollar. This was partly offset by lower production at Coppabella. The average realized price was down about $21 per ton compared to last quarter due to a higher mix of Shoal Creek sales. We also saw benchmark prices for PCI and high-vol A coals, each down about $15 a ton quarter-over-quarter. For the full year, the Seaborne Met segment reported $243 million of adjusted EBITDA. Shipments increased 400,000 tons year-over-year to $7.3 million. The segment achieved EBITDA margins of 15%, a favorable result considering that market price has pushed realizations down at $44 per ton in the year. Switching to U.S. thermal. The mines generated $93 million of adjusted EBITDA in the fourth quarter and that resulted in $72 million of free cash flow. PRB mines shipped 23 million tons, well ahead of expectations. Continued operational discipline kept costs at $11.50 per ton, the same as last quarter, and that led us maintain the same 17% margins in the fourth quarter and generate $53 million of adjusted EBITDA. The other U.S. thermal mines delivered $41 million of adjusted EBITDA. In the Midwest, we reached contractual agreements with certain customers to offset lower 2024 shipments. Production was 200,000 tons less than expected as the previously disclosed geological conditions at 20-mile required us to step the longwall around rock land. We've turned the corner on that issue and longwall production recently resumed with the mind set for a strong 2025. Together, the U.S. thermal mines produced $289 million of adjusted EBITDA in 2024 and required just $54 million of capital resulting in $235 million of free cash flow. The last comment I'll make on Q4 results relates to other operating costs. we recorded a $41 million non-cash charge for the remeasurement of our Australian balance sheet at year-end due to a lower A dollar exchange rate. The weaker Australian dollar benefited operating costs throughout the quarter, providing a bit of a built-in natural hedge to earnings. But as the A dollar weakened throughout the quarter, the period end remeasurement resulted in a significant net negative impact to Q4 EBITDA. Looking ahead to 2025, I'll briefly review guidance for the full year. We see that some analysts are including the Anglo acquisition and their 2025 estimates for Peabody. But our guidance excludes contributions until the transaction is complete. This year, seaborne thermal volumes are expected to be lower than 2024 and due to reduced production at Wilpinjong and the closing of the Wambo Underground mine midyear, which will be partly offset by higher production from Wambo's surface operations. Additionally, domestic cost plus sales requirements are down another 400,000 tons in 2025, allowing us to achieve export pricing on that volume. Shipments are targeted to be 14.7 million tons, including 9.3 million export tons. Costs are projected to be consistent with 2024 levels at $47 to $52 per ton. Seaborne metallurgical volumes are projected to increase over 1 million tons to 8.5 million tons, primarily due to higher volume at Shoal Creek and the continued ramp-up at Centurion. This occurs even as we work through the high wall stability challenges at Coppabella as we reconfigure the mine for an optimal long-term solution. Segment costs are targeted at $120 to $130 per ton, in line with last year. In the PRB, we are forecasting shipments between 72 million and 78 million tons and currently have 71 million tons priced at $13.85. Costs are expected to remain mostly flat with 2024 levels at $12 to $12.75 per ton. Other U.S. thermal volumes are expected to be about 14 million tons. We have 13.6 million tons priced at $52 and expect costs in the range of $43 to $47 per ton, consistent with last year. Total capital expenditures for 2025 are estimated at $450 million, including $280 million in project capital, primarily for the continued development of Centurion. In summary, we delivered on our 2024 goals. We remain committed to financial discipline and growing free cash flow per share. 2025 promises to be a busy year that will be shaped by the Anglo acquisition, advancing Centurion and U.S. policy. For more on that, I'll turn the call back to Jim.

Thanks, Mark. I'll turn briefly to Peabody's main focus areas for the new year. It's fair to say that we begin 2025 with an ambitious agenda. Our first focus is an every-year item. The relentless pursuit of safe, productive and environmentally sound operations. Our second focus this year is to continue to ramp up the flagship Centurion mine on time and on budget. I'm pleased to report that development is running ahead of schedule and all systems are go for our planned longwall start-up early next year. Our third priority is to complete our premium hard coking coal acquisition, which, together with Centurion will transform Peabody's product and financial profile. Priority number four is to serve growing Asian thermal coal demand to our low-cost Australian export platform, with longer-term mine extensions teed up. It's no surprise that the International Energy Agency recently reported that last year, the world used a record amount of coal, 8.77 billion metric tons, representing more than 1 ton for every man, woman and child on earth. IEA also projects that global coal use will continue to grow for the next several years. Our fifth priority is to leverage our low-cost U.S. coal production to capitalize on emerging favorable policy and commercial themes and that dynamic continues to unfold as we speak. And finally, we work every day to enhance long-term cash flow per share creation. While the actions we're undertaking today are enhancing our shareholder value proposition in three areas: earnings growth, sustainable shareholder returns and multiples expansion over time. And it's fair to say that our share price is reflecting none of the potential uplift in valuation from our recent actions. I have never been more optimistic about the prospects for Peabody and look forward to seeing those positive actions translate into tangible share price appreciation as we continue to execute. Operator, we're now ready to take questions.

[Operator Instructions] The first question comes from Nick Giles with B. Riley Securities.

My first question is around the preemption rights process. I was wondering if you could add any color around what those conversations have looked like? And I had the same question for any potential stake sale. Is there a preference for incremental stakes in the Anglo assets versus any stake at Centurion?

Nick, Jim Grech here. On the preemption question that, as part of any sales process, it's a typical contract term when you have joint venture partners, it's progressing well. The timeline for the deadlines on it sometime in mid-March. We expect that to -- the deadline to come and pass and we'll move forward with the closing of the transaction. The -- on the asset sales, could you again ask that question again, so I'm sure we respond to it correctly.

Yes, Jim. That's very helpful. And just on the asset sales, I was wondering if there would be a preference for additional stakes at the Anglo assets versus one at Centurion?

Nick, we would -- if anybody -- if the discussions lead to fair value, full value offers on the asset sales, we look at some minority sales in those assets, whether it's with the Anglo assets or Centurion. So we are anticipating that to be part of the financing process that we have here for the acquisition and some of those steps have been undertaken already. And -- but it's too early to call what, if any, would be the results of that.

Got it. Jim, that's very helpful. Shifting gears. Met guidance of 8.5 million tons at the midpoint. I assume around 0.5 million tons could come from Centurion, but how should we think about bridging from the 2024 level to 2025 guidance. And then similarly, on the cost side, costs are up at the midpoint versus 2024. So how should we bridge those as well?

Nick, welcome to the call. I read your note this morning, and you looked like your model was perfect. So congratulations. I think, you're doing a better job than Lucas already in your first call. But -- and I say that Tongue in Chico, I'm sure Lucas is listening in. So to answer your question on Seaborne Met. You're right, we're up over 1 million tons and about 400,000 to 500,000 tons more year-over-year as at Centurion. Shoal Creek is also up about 600,000 tons. So that's the delta there. As far as costs go, we are forecasting $120 to $130, full year '24 was $123. So pretty consistent. I'd say there's two things that may need to be a bit higher, and that is one, as I mentioned in my remarks, we're resetting Coppabella for an optimal long-term solution. We're going to be moving more waste, about 6 million bank cubic meters more year-over-year. And don't forget, we had a pretty weak Aussie dollar as well in 2024.

The next question comes from Nathan Martin with the Benchmark Company.

Maybe just one more question on the Anglo acquisition. You guys mentioned several regulatory approvals have come already. What's left, anything there from the standpoint that could hold you guys up beyond that targeted 2Q closing?

Yes, Nate, we've had some in and the rest are in process and the various international ones, and I think we have 1 left in Australia. The initial indication is that everything is going just fine with them. And the timing on those regulatory approvals is anywhere from later in February to maybe end of March, first week of April. So it spans that time frame. So just like with the preemptions, we just got to work through the process. There's a time frame involved. We're stepping through it. And right now, everything looks good to us, Nate.

Sounds good, Jim. And then, maybe coming back to the preemptions are really just the minority interest sales. Has your preference changed at all? Or how should we think about the balance between minority interest sales and debt for the transaction?

Well, I'll just have a comment on the sales process, and then I'll let Mark get to some of the details, but as I said, we've started the beginning of looking at potential minority sale positions in the Anglo assets in Centurion. And we've had some very robust interest in the assets coming from many different sectors in U.S., Australia and International. So again, I'm not going to sit here and predict what's going to happen, because everything is in negotiation. But I will say that it's been very robust interest at the beginning here of this process.

Nate, not a lot has changed from when we announced the transaction and our plans for the permanent financing. The $1.7 billion upfront payment, we expect to be funded primarily with debt, the lion's share being high-yield secured notes. We've talked about the project level equity, the minority stake sales as being another key option there. And as Jim mentioned, those discussions are underway. The timing as well as magnitude of those sell-downs become factors here. And then lastly, we potentially round out with convertible notes or other financing. So not a lot has changed. I will say that, that process is underway. It's going well in the early stages. There's strong inbound interest. We continue to test market capacity, and we're highly confident we'll arrange the financing along the lines we originally announced.

And Mark, any commentary around potentially needing to issue common equity. I know that's a question investors are focused on.

Yes. I'd probably, I'd echo Jim's comments that reflect our belief that a lot of the value in Peabody and the pending acquisition are not currently reflected in our share price. Unfortunately, we don't get to pick the time when these types of assets become available, and we recognize spot coal prices are down, but we didn't buy these multi-decade assets for short-term changes in spot prices, which can influence the coal equities. Our #1 goal remains to enhance shareholder value, and you do that by increasing free cash flow per share. When we simulate free cash flow out of the acquisition, our P50 case without Grosvenor results in -- and over $800 million of free cash flow in the initial 5 years after all of the deferred and price contingent consideration, effectively paying 1/2 of that initial consideration off, leaving us with a very manageable permanent debt slice of the capital stack and a significantly higher free cash flow base to provide sustainable shareholder returns. So we recognize the need to appreciate the volatility in seaborne coal prices and remain prudent to ensure financial resiliency throughout the price cycle so we can execute the strategy. The coal equities have all traded down since the announcement. And we're going to take a good hard look at it. It's the last on our priority list. But we have all the tools in the kit, and we continue to assess what the market will provide.

Great. Appreciate those thoughts. And then, maybe just one final, don't want to leave Malcolm out. I know you touched on this briefly in your prepared remarks, but coming back to China's new 15% tariff on U.S. coal imports. Obviously, the bulk of Peabody's export sales come from Australia, but how you see that tariff potentially impacting your business as well as the seaborne markets in general?

Yes. Look, one thing with the markets is, they're a little bit like a balloon. If you push something in one spot, it comes out somewhere else. And so U.S. exports are getting pushed here in terms of their price competitiveness into Asia. And for us, we've got about 600,000 tons of product that went to China last year. And that would mean that if we did nothing in continued supply to China, we'd have a 15% lower price. And it really doesn't help when that's the clearing level, and that's your alternative, because other customers now, when you look to sell to them in Asia, we'll be looking at what that alternative is. It's positive for Australia in the sense that Australia becomes more and more competitive in Asia, which is the growth base for met coal demand. But for us, it's probably not such a big issue, but I would have liked not to have seen this happen. But look, the markets will readjust. Maybe there may be more product go to -- U.S. product go to India. And more Australian products go to China to balance that out or more U.S. products to Europe and less Australian products to Europe. The market will work that out. But to deal with that, we need some price signals and the price signals to make that readjustment could be a little bit painful in terms of our Shoal Creek returns over the next quarter or so. But look, let's wait and see how it all plays out, but I hope that's giving you my perspective on them.

That's great. And just to clarify, Malcolm, the 600,000 tons of China, is that from Shoal Creek you're referring to specifically?

Yes, that's Shoal Creek.

The next question comes from Katja Jancic with BMO Capital Markets.

Maybe going back to the met coal cost guide. Can you talk a bit more about how much Coppabella is negatively impacting costs? Because I would assume with production higher in general, and met coal prices lower, the cost should still be trending more positively or lower?

Katja, two things. One, for Q1, we're guiding a little bit higher than the full year on a ratable basis. Q4, we turned in much better than expected and anticipated at only $113. But we think that Q1, we now will be impacted by a longwall move at Shoal Creek, so a little bit higher than ratable in Q1. For the full year, we've put our guidance at $120 to $130. 2024 came in at $123. As I mentioned before, it's really just moving those additional 6 million BCMs and the really weak A dollar throughout 2024, particularly in the back half of the year. That's driving the difference. Otherwise, we see them pretty consistent. And really, we don't see any significant inflation or other issues. So that's really the story. Does that help?

No, that's helpful. And then, maybe there were some reports that Davenport Bay was impacted by weather. Are you seeing any impact from that quarter-to-date. And is -- are there any issues with production given the weather currently in Australia?

Katja, Malcolm here. Look, this is pretty normal. Our monsoonal trough has come over Queensland probably 10 days ago and moved from the North of Queensland to the South. And so over the past week, Davenport Bay received around 400 millimeters of rain. And most of the rain has remained coastal. What that means is that the ability to stack coal or reclaim coal when it's very wet with rain is very limited. So there has been outages at the port, and there has been like a, let's call it, a 7-day interruption, but I view that as very short term. In terms of our mines, we've had a little bit of seasonal rain there, but nothing that's created a remarkable interruption at this stage.

Again, our next question comes from Chris LaFemina with Jefferies.

So I wanted to ask about the thermal coal segments. If we look at the 2025 guidance, it's basically lower volumes and probably lower margins. I mean, costs are flattish and prices are going to be down, I think costs in the PRB actually expected to be up. But I wanted to kind of understand where the thermal segments will be heading after 2025? So it's helpful that we have -- you've given us met coal guidance for 2026 on costs and obviously on volumes as well. But where is thermal coal heading? Because seaborne thermal volumes have been heading lower. PRB obviously heading lower. And it's hard to offset the negative impact of fixed cost leverage when you have declining volumes. So we're looking at thermal coal business that's going to have a flat to rising cost base and declining volumes and then the EBITDA upside really just depends on higher prices? Or is there anything else going on there that could lead to margin expansion and EBITDA growth without prices going up?

Yes, Chris, I'll comment on the U.S. platform and then Mark and maybe Malcolm can give you some comments on the Australian platform. On the U.S. platform, the PRB tonnage is, we have the ability to move those tons up and down. And some of the forecasts that you see maybe we're pre all the momentum we're getting currently here within the last few months in the U.S. market with the Trump administration, the strong push for reliability and keeping in coal plants open, the load growth. And so in the U.S., if the market demands are there, which we think those tailwinds are certainly getting much, much stronger, we can certainly respond with the tonnages in the PRB. Of course, we'll also maintain some pricing discipline on that as well to do that. So in the U.S., I would say the tonnages that you see any decreases maybe are based on market assumptions and not the physical asset base. So with that, I'll let the other guys talk about the Australian platform.

Yes. Just briefly on seaborne thermal, we're down this year, year-over-year. And we kind of talked a bit about this last quarter, but just to reemphasize, I mean, we pulled about 200,000 tons forward at the Wambo Underground in the fourth quarter and really beat Seaborne Thermal in the fourth quarter. We've already announced that, that underground will cease the operations mid-year. So we're going to be down about 800,000 tons year-over-year at the Wambo Underground for comparison purposes. And Wilpinjong is declining as well about 1.4 million tons, partially offset by the Wambo open cut, which we expect to be up 10%, maybe another 300,000 tons there. So that's really the delta year-over-year. And going forward, we haven't provided any guidance beyond 2025 except for what we anticipate from the acquisition, just to put a marker out there. So we haven't given any Peabody guidance. We talked about this in the past, the Wilpinjong production continues to decline until we open up pit 9 and 10 an extension a few years out. But along with that is a continued decline in the domestic ton requirements. So I think, this year, we're probably looking at a net a little over 5 million tons of export out of Wilpinjong. And I think over the next 5 years, you're going to see something pretty close to that, about 4.8 to 5 million tons on average. So I really see that being pretty consistent. And then as Jim mentioned, the U.S. piece is really just demand driven.

Okay. And just secondly, on Grosvenor. I think, Anglo had some comments this morning about having put some cameras down in the mine and they saw limited damage, which is pretty encouraging actually. And I think, it seems like there's potential for that to maybe come online a bit sooner than people had expected based on what's been discovered so far. Just could you comment on your understanding of what's happening there and what your thought is about the potential we start for that asset in terms of timing, et cetera?

Yes, Chris, we -- that's encouraging news to hear that you just mentioned about what the Anglo stated. We're really not in a good position to start putting out estimates of when we'll open that mine back up and the cost to do that until we get ownership of it and can really see the conditions firsthand. So, I will say that, we do have optimism that we'll be able to do that based on what we've been able to do with the Centurion mine, the experience we have and the work we have with the regulators. We certainly are well positioned to bring that mine back online, but we're not a point at where we're going to start giving out estimates on timeline or costs or anything. It's just a little too early for us, because we just don't have enough information to do that yet.

Next question is a follow-up from Nick Giles.

Mark, maybe in response to your earlier comments, you outperformed my model pretty meaningfully in the PRB. So I'm sure Lucas took notice of that. But I wanted to come back to Shoal Creek. It seems like production was stronger there, but I wanted to get your take on kind of where realizations are today? And maybe bigger picture, where does this asset fit in your portfolio longer term? And could the sale of the asset be an additional lever you could pull in the case of permanent financing?

I'll start and then, maybe Malcolm can talk about realizations a bit more. But yes, Shoal Creek is really operating extremely well, did a great, great year. We expect even better things in 2025, as I noted earlier. So operationally, it's hitting on all cylinders, doing absolutely everything that we anticipate to do with the new longwall kit. Realizations have been a bit of a challenge. But maybe, Malcolm, you want to add a little color to that.

Yes. Look, sure, last call, I did give a sort of a breakdown as to where those Asian realizations are. And obviously, with Europe, not as strong for us at the moment, a lot of our returns are coming from Asia. And at the moment, to be honest, you're talking an FOB return on a short-term basis of somewhere between $120 and $130 for that greater product. That's where the price point is, if you're selling into Asia.

The next question is from Matt Warder with thecoaltrader.com.

I actually had a follow-up question to Nick, who basically stole most of my thunder there. The realizations for Shoal Creek, is that basically just getting whacked due to the freight differential over to Asia. Is that the culprit there?

Yes, Matt. Look, there's two things. If you look at the top CSR coal, high CSR coals, we're talking about those being at around $180 FOB in Australia. And now, when we talk about closer to 60 CSR type coals, which Shoal Creek is, their returns are about $150 FOB metric, then you have to take a freight differential off that and convert it to short tons, and that's how I get to my $120 to $130.

Okay. That's all good. Also with regard to the guidance, how are you guys looking at semisoft and PCI realizations in 2025 this year? Any color on that would be really helpful.

Yes. So within the existing Peabody portfolio, we don't really sell into the semi-soft market. But what I can -- and I would like to talk about the semisoft market, because that market is quite long at the moment, particularly out of Newcastle. So there's been a swing to Queensland semi-soft. And so that's part of what's happening with Newcastle returns. So there's a lot of -- what used to be that lower semi-soft products now coming back into thermal. So when you think about new customers that's the challenge there. So yes, semi-soft quite challenged in Europe. There's been -- in Poland, there's been a couple of outages, which we've seen some semi-soft demand come out of there. But really, semi-soft is quite weak. But when it comes to PCI, there's two types of PCI. There's low-vol PCI, high-quality PCI coming from mines such as, is Coppabella Moorvale. And then there's byproduct PCIs, which tend to be higher volatile manner. So when you come to that premium low-vol category, we see that as really quite short and challenged and the like. And we probably see the relative price point at over 80% for that coal at the moment relative to prime low-vol hard coking coal.

Got you. That's pretty helpful. If I can switch gears for a second. I think, as Jim had a comment about receiving inbounds from PE firms about to baseload power for data centers. Is that something you guys are pursuing at all at this point? I know, it was kind of a discussion point with [ Thomas ] for a while there. Is that the -- I just wondered how you guys are thinking about that at this point in time?

Well, Matt, first off, welcome to our earnings call. We appreciate the interest and the questions and -- from you. So secondly, we are getting inbounds from companies that are trying to figure out how to serve this growing electrical load demands and do it reliably. And so people are looking at coal plants. And then, if they're looking at coal plants, they want to know that it has long-term supply to those coal plants. So with the long life and low cost reserves, we -- our people naturally come to us and ask us if there's anything that we can work together, things that we would do, would we supply that, would we participate in that. So we are getting those inbounds. It's certainly picked up with the Trump administration and their favorable stance towards coal. I wouldn't say there's anything imminent or breaking on that, but from a few months ago where we had none of that type of interest coming in or almost none. It's been noticeably increased here in the recent month or 2 months.

No, that's interesting. I mean, I think, that's something that the whole industry can take advantage of going forward. I did have one last sort of question, which pertains to the Anglo assets, specifically their CapEx. If I recall correctly from the presentation, I think, you're targeting a couple of hundred million per year in CapEx for the first 2 or 3 years and then it goes to a maintenance CapEx level of like $150 million, like $13 per clean ton. Am I thinking about that right? And if so, what's the elevated level in the first couple of years? What was that being put toward?

Matt, you got that exactly right. Those are the numbers we've used. Really, the initial couple of years being higher is really due to some of the objectives that we have to, to get that production levels up, to what we have forecasted. There's a new longwall, obviously, Moranbah North, which was a big part in '26. We also talked about some fleet enhancements at Capcoal, et cetera. So there's a handful of things getting both the North and South District going to Moranbah North, walk-on, walk-off capabilities, that kind of stuff. And there's those types of things. And then we do see that leveling down to about $150 million on an average basis going forward for -- I think we looked at it in the model pie for the next 10 years on a sustainable basis.

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Grech for any closing remarks.

Thank you, operator, and thank you all for the time today. I'd also like to express my gratitude to the Peabody team for the many excellent accomplishments we had in 2024, and we're planning a highly productive next several months. So we look forward to keeping everyone apprised on our progress. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.