THE rally in coal prices over the past 12 months has prompted a rush to restart mothballed mines, resume mine expansion plans and launch new mines in coal mining centres around the world. The coal industry upturn has created thousands of jobs and provided fresh hope to mining communities and families whose fortunes nose-dived as prices plunged in 2014.
|Glencore’s Mount Owen operations in the Hunter Valley of NSW.|
In Australia the industry’s revitalisation has been of most benefit in the large, traditional coal mining regions of Queensland and New South Wales, while there has been renewed interest in the newer coal regions in both states.
The Minerals Council believes the industry has a rosy future and its CEO Stephen Galilee said the recovery was providing an opportunity to deliver jobs and investment over the coming years, as well as more royalties for mining communities.
NSW Resources Minister Anthony Roberts said coal would remain a very important energy source for Asia, even as the transition to alternative energy sources gathers momentum. The same sentiments are shared by government and industry representatives in Queensland.
Private, family-owned company Bloomfield Group is one of many coal companies that have taken advantage of the upturn through its operations in the Hunter Valley of NSW. Its chairman John Richardson is quietly optimistic about the rising coal price. “We believe demand will remain strong in the north Asian countries and probably over time be supplemented by some of the South East Asia countries as they come on line.”
Bloomfield has played an important part in the upturn in the Hunter Valley as it acquired Vale’s former Camberwell mine, re-named it Rix’s Creek North and reopened it in 2016 as the coal price surged. It advertised 100 jobs and received 1000 applications.
Elsewhere in the Hunter, Glencore is reopening the Integra underground mine, plans to expand the Mount Owen mine, and has lodged an application to develop a new mine combining the existing open cut at Wambo Coal with a new open cut at United Collieries; Mach Energy plans to restart the Mount Pleasant mine, which it bought from Rio Tinto, in 2018; Australian Pacific Coal plans to redevelop Dartbrook mine; and there is interest in Anglo American’s Drayton South mine. Also in NSW, Jindal Steel & Power is ramping up output at the Wongawilli mine, which its subsidiary Wollongong Coal reopened last year.
The story is similar in Queensland’s Bowen Basin, although there has been a short-term setback with flood damage caused by Cyclone Debbie. Cockatoo Coal has emerged from voluntary administration and is restarting production at Baralaba North; Mineralogy plans to establish the Styx coal project involving two open cut operations with a 20-25 year mine life; New Hope Group has received approval for a $900 million expansion of New Acland mine which will increase annual production to 7.5 million tonnes; Pembroke Resources aims to build a coal mine at Olive Downs, after purchasing some of its projects from Peabody Energy; and Gateway Mining has negotiated a provisional agreement to acquire two large, adjacent coking coal projects - Wilton and Fairhill.
Among the other coal developments are:
Approval for Yancoal-Rio deal
Yancoal has secured Foreign Investment Review Board approval for its proposed A$3.2 billion acquisition of Coal & Allied Industries, Rio Tinto’s Hunter Valley coal division. Coal & Allied owns majority stakes in the Hunter Valley, Mount Thorley and Warkworth coal mines.
The proposed deal between involves a $US1.95 billion upfront payment and the potential for a further $US500 million over a five-year period. Rio Tinto will also potentially be entitled to royalties once the deal is completed.
The transaction, which is expected to close in the September quarter, will see Yancoal’s Australian coal portfolio expand to seven sites across Queensland and NSW.
BMA to build overland conveyor
The BHP Billiton Mitsubishi Alliance (BMA) has approved a A$270.1 million investment in the Caval Ridge Southern Circuit (CRSC) capital growth project in the Bowen Basin. CRSC is an 11km overland conveyor system which will transport coal from Peak Downs mine to the coal handling preparation plant near Caval Ridge mine.
BHP said the project would create up to 400 new construction jobs and about 200 ongoing operational roles. It would also result in the Caval Ridge preparation plant increasing annual throughput capacity to 10 million tonnes.
BHP Billiton operations president, minerals Australia, Mike Henry said, “The investment flowing from the project will help support the local community and state economy after what has been a difficult time in the region.”
Construction is scheduled to commence in mid-2017 and take 18 months to complete. The project will also mean a new stockpile pad and run-of-mine station at Peak Downs, and upgrades to the coal handling preparation plant and stockyard at Caval Ridge. BMA will also invest in new mining fleet, including excavators, and trucks.
TerraCom to restart Blair Athol
TerraCom has secured A$13.5 million in funding to facilitate the transfer of the Blair Athol mining lease in Queensland. The funding, secured through subsidiary Orion Mining, will also allow for the start of mining and rehabilitation activities at the coal mine.
In 2016 TerraCom signed a binding sales and purchase agreement with Rio Tinto to acquire Blair Athol for A$1. Under the agreement, TerraCom will receive A$80 million from Rio to meet rehabilitation costs at the site.
TerraCom will start more than 50 hectares of rehabilitation while bringing the mine back into production, with the project expected to deliver 2 million tonnes a year over the first seven years of operation. Operations are likely to restart during the current quarter.
Glencore Collinsville ramp-up
Increased demand has led Glencore to ramp up operations at the historic Collinsville mine in the Bowen Basin. The company scaled back production in the past few years owing to depressed prices, however it says demand for the specific type of coal produced at the mine prompted it to increase production.
The open cut mine in the northern part of the basin has annual run of mine capacity of 6 million tonnes. It is part of the NCA Project, which also includes the Newlands coal operation and Abbot Point Bulk Coal Terminal.
Glencore has also demonstrated its commitment to the Bowen Basin by acquiring the interests of its JV partners in Collinsville and Newlands, Japan’s Itochu (35%) and Sumisho (10%), with the acquisitions resulting in Glencore becoming sole owner.
The company has also welcomed a Bill passed by the Queensland Parliament that includes important amendments in relation to the Newlands mine and QCoal Group’s proposed Byerwen Project to enable both operations to successfully co-exist.
Springvale expansion approved
|BHP Billiton’s Mount Arthur coal project in the Hunter Valley.|
Centennial Coal’s application to expand operations at the Springvale mine in the NSW Western Coalfields has been approved, bringing another 140 jobs to the mining town of Lithgow.
The expansion will allow the mine, which supplies the nearby Mt Piper power station, to annually produce 5.5 million tonnes, up from 4.5 million. The approval allows Springvale to increase the mine’s coal stockpile capacity from 85,000 tonnes to 200,000 tonnes.
In its modification application Centennial highlighted that most of its workforce is based in the Lithgow area. It estimated the modification would bring a net benefit of approximately $32 million to the economy.
Stanmore secures JOGMEC support
Stanmore Coal is advancing plans for its proposed Isaac Plains East open cut and Isaac Plains underground projects in the Bowen Basin. The company last year reopened the Isaac Plains open cut mine it purchased from Vale and Sumitomo in 2015.
To assist the company’s growth plans it has recently signed a Joint Exploration and Support Agreement (JESA) with Japan Oil, Gas and Metals National Corporation (JOGMEC). This provides Stanmore with A$3 million of funding to accelerate exploration, approvals and studies to underpin finalisation of studies for the Isaac Plains East project and the investment decision for the underground project.
In return, Stanmore will provide JOGMEC with an annual right to tender a portion of the coking coal produced from these projects to end users in Japan.