BHP Billiton has pushed back the proposed development of a $4 billion Queensland coking coalmine by two years amid slowing global steel demand and production cutbacks.
BHP has submitted an environmental impact statement for its proposed Caval Ridge mine in the Bowen Basin, revealing it expects the development to cost $4bn. It also revealed it had backed off on previous expectations that first production from the mine would be in 2011.
It was now aiming for 2013.
Caval Ridge is the second part of the four-pronged Bowen Basin Growth Project that BHP and 50 per cent joint venture partner Mitsubishi hope will boost their Australian annual coking coal production capacity from 60 million tonnes to more than 80 million.
In January, BHP, by far the world's biggest coking coal exporter, said it would cut production at its Australian mines by 10 to 15 per cent because of the global financial crisis and its effect on steel demand.
BHP will reveal the extent of its coal cutbacks in its second-quarter report next week.
Production could still exceed previous guidance, with Australian export data showing record China-bound coking coal shipments for May.
According to Macquarie Bank, Chinese purchases of Australian coking coal are up 10 million tonnes in the first five months of 2009, offsetting an 18 million tonne drop from other destinations.
Spot prices of high-quality hard coking coal have now risen to more than $US135 ($174) a tonne, which is higher than the recently negotiated contract price of about $US130.
They are still well down on the $US300/t contract prices of last year, when BHP was entertaining more rapid expansion.
China has been a surprise saviour for many Queensland mines amid the global slowdown as the closure of Chinese mines due to cost and safety issues resulted in the Asian powerhouse switching from being a net exporter to a net importer of coking coal.
Further signs of growth came from Queensland's Dalrymple Bay coal port, which had record coal exports of 4.8 million tonnes in June, following a boost in capacity.
The first part of BHP's 21.5 million tonne expansion is the $US500 million Daunia mine, which is designed to boost production by 4 million tonnes a year from 2010. Daunia is currently in feasibility study stage, with the Queensland government targeting environmental approval this month, after which the BHP board will decide whether to go ahead with it.
At Caval Ridge, BHP plans to boost coking coal production by another 8 million tonnes.
BHP also revealed it had raised the annual production capacity of stage three of the Bowen Basin project, the Goonyella Riverside mine expansion, by 1.5 million tonnes to 9.5 million tonnes.
The fourth part of the growth plan is an airport.
Coal from Caval Ridge will be railed to Dalrymple Bay and the BHP-owned Hay Point ports near Mackay, BHP said.
The miner is also studying boosting the capacity at Hay Point from 44 million tonnes a year to 75 million tonnes.
Source: The Australian
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