Why is the Whitehaven share price flaming out today?

The S&P/ASX 200 Index (ASX: XJO) is enjoying a rebound of sorts so far this Thursday. After spending most of the morning in red territory, the index rebounded just before lunchtime and is now up a healthy 0.4% at just over 7,420 points. But let’s talk about the Whitehaven Coal Ltd (ASX: WHC) share price. 

ASX 200 coal miner Whitehaven is not enjoying the rebound of the broad market. In fact, the Whitehaven share price has fallen by a hefty 1% at the time of writing to $89.85 a share.

It was even worse for Whitehaven earlier this morning. The company got down to a low of $8.60 (down more than 3%) soon after market open:

So what’s gone so wrong for Whitehaven shares this Thursday?

Why is the Whitehaven share price flaming out on Thursday?

Well, it could have something to do with the announcement Whitehaven put out just before market open this morning.

It related to media reports that the New South Wales government is looking to expand its coal reservation policy to “include the majority of the state’s coal mines”. The government is reportedly hoping to mitigate a 4 million tonne shortfall in annual supply for power generation in the state.

Here’s some of what Whitehaven had to say in their response this morning:

In December 2022, the NSW Government imposed domestic coal reservation and price cap orders on a number of NSW producers which have historically supplied coal to the domestic energy market to offer at least 18.6 million tonnes into the domestic market… Whitehaven was not subject to these orders.

Yesterday, officials from the NSW Government met with the Company to provide an initial briefing on the proposed expansion of the policy to include new participants, including Whitehaven, and undertook to provide further details in coming days.

The Company is currently reviewing the potential implications of an expanded scheme and will continue to engage with the NSW Government and update the market as appropriate.

Government intervention in energy markets is probably not conducive to higher profits at Whitehaven. Thus, it’s perhaps no surprise that investors might react with trepidation to this news, and have sent the Whitehaven share price down accordingly.

This is the most likely explanation as to why Whitehaven shares are getting a dumping during this Thursday’s session.

But longer-term Whitehaven shareholders don’t have too much to complain about. This ASX 200 coal miner is still up an extraordinary 205% over the past 12 months alone, and up close to 1,000% since the lows of 2020.

The post Why is the Whitehaven share price flaming out today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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