Bowen Basin Coal Mine Approved

Bowen Basin Coal Mine Approved

The government in the Australian state of Queensland has approved the development of a A$4 billion coal mine in the state’s Bowen Basin region that will create over1500 new jobs. However, the government also announced said the development was subject to a raft of strict development and operating constraints.

The Caval Ridge project is proposed by the BHP Billiton Mitsubishi Alliance and plans an open-cast mine that straddles the Peak Downs Highway, near Moranbah, 170 kilometres south-west of Mackay.

State treasurer Andrew Fraser said the government's decision was based on the coordinator-general's evaluation, which followed over 18 months of environmental impact assessments.

The state’s conditions set clear principles and procedures with respect to air quality monitoring, dust and water management, community consultation and the mitigation of potential social impacts of the mine.

The Federal Minister for Environment will assess the report under Commonwealth environmental legislation.

Around 1200 construction jobs and 495 ongoing operational jobs will be created for up to 30 years.

Construction of the mine could start in 2011, with first coal exports by 2014.

Queensland Miners To Bid For Rail Network

Bid Worth Over $A4 billion

A group of 13 Australian coal miners have made a joint A$4.85 billion bid for the Queensland rail-track network in a bid to prevent the system being sold on to the stock market as part of the state’s privatisation programme.


The group, the Queensland Coal Industry Rail Group (QCIRG), is headed by BHP Billiton, Rio Tinto and Xstrata and says its bid was conditional on the state government dropping its plan to sell both the track network and the coal haulage business in an initial public offer.

The miners are concerned that if both the tracks and trains are sold together the new private owner would exert too much power over the coal industry.

Most of Australia's coal ports are dogged by infrastructure constraints and suffer from endemic congestion, with the bottlenecks resulting in lengthy queues of ships waiting for berths.

QCIRG is chaired by former New South Wales state premier Nick Greiner, who said the offer represents a substantial premium to what is likely to be achieved under the government's proposed listing plan.

"We have considered the alternative model under the IPO ... and strongly believe it does not represent an optimal or even reasonable basis for assuring the future of the state's major export industry," Greiner said in a statement.

"Importantly, our offer is able to be settled with the government prior to the IPO and will not be dependent on volatile equity markets, removing major risk for the state while also providing early settlement."

Coal Offloaded from Stricken Ship

Shen Neng 1 To Be Towed Back To China

Salvage crews have begun to offload coal from the Chinese-registered ship that ran aground on the Great Barrier Reef off the coast of Queensland, Australia last month.

A smaller bulk carrier has docked beside the Shen Neng 1 and work has begun to offload a third of its coal. A second coal lighter will take over offloading duties when the first is full, probably this weekend. Around 19,000 tonnes will be removed from the over the next three weeks and the ship will then be towed back to China.

The Shen Neng 1 ran aground on 3 April causing extensive damage to the reef. It was refloated on 12 April 12 and towed to calmer waters off Hervey Bay on Tuesday for the salvage operation.

MSQ general manager Patrick Quirk said extensive environmental protection measures were in place.

"Water sprays are being used to suppress any coal dust which may be stirred up by the lighter's grab buckets, which are also specially designed to reduce spillage," Mr Quirk said.

"We will also have skilled observers watching the transfer process for any sign of spillage and they can call an immediate halt to the operation if they have any concerns."

Environmentalists have called for the Queensland government to guarantee that the state’s marine parks won’t be used as a refuge for ships that have run aground. A Greenpeace spokeswoman pointed out that the ship had been anchored in the Hervey Bay marine park that was home to dolphins and whales and she urged the state not to allow the Shen Neng 1 to set a precedent.

Northern Energy Lands Chinese Deal For Colton Mine

Mine Will Sell 65 Per Cent Of Output To Chinese Mill

Australia’s Northern Energy Corporation has agreed a multi-million dollar deal with the Xinyang Group in China to sell 65 per cent of coking coal mined at its Colton mine near Maryborough in Queensland over the next 10 years.


At current coking coal prices the agreement would result in $700 million revenue to Northern Energy over the next 10 years.


The company will issue 16 million shares to Xinyang, raising $23 million to develop Colton and securing 100 jobs anticipated at the site.


Northern Energy expects to mine 500,000 tonnes a year of coking coal for each of the next eight to 10 years, although the possibility of extending the life of the mine was not being ruled out.


“The agreement with Xinyang provides us with the capital to take the next step in the development of Colton while retaining 100 per cent of the project as we fully evaluate the size of the Maryborough resource base and the potential for further mine expansion,” managing director Keith Barker said.


“The size of the resource identified to date has exceeded our original expectations and the ongoing evaluation work provides us with confidence that additional resources will be defined which will in turn enable us to ultimately increase production beyond the 500,000 tonnes per annum currently planned. Expansion of production will require additional mining lease areas and will be subject to a separate approval process to that applicable to Colton.”

Chinese Coal Ship Refloated

Reef Could Take 20 Years To Recover

The Chinese coal carrier, the Shen Neng 1, which ran aground on the Great Barrier Reef off the coast of Queensland, has been refloated and is now lying in safe waters off Great Keppel Island.

However, Australian scientists say that the ship caused miles of damage to the Reef and it could take 20 years for the reef to recover.
The Shen Neng 1 ran aground 10 days previously, on a journey taking Australian coal to China.

Great Barrier Reef Marine Park Authority (GBRMPA) chief scientist David Wachenfeld says the damage is worse than expected and stretches for three kilometres.

"This is by far the largest ship grounding scar we have seen on the Great Barrier Reef to date," he told ABC.

"This vessel did not make an impact in one place and rest there and then was pulled off.

"This scar is more in the region of 3km long and up to 250 metres wide."

Marine park authority chairman Russell Reichelt said toxic paint from the hull of the coal carrier was killing coral around Douglas Shoal, where the ship ran aground. He added that it would be some weeks before the full extent of the damage was known but said that paint that had been scrapped off onto the Reef is killing coral in the vicinity.

"I'm a multiple-use marine park advocate but I do think we have claimed in the past that we've got the best shipping protection in the world," he said.
"If the best isn't good enough - we're still having groundings - we have to do better."

A white plume that had been photographed around the coral was evidence that the ship’s hull was crushing coral as it moved with the wind and the swell of the sea.
Australian environment minister Peter Garrett has asked the marine park authority for a thorough review of the site.

Xiangguang Copper Breaks Off CuDeco Talks

China's Xiangguang Copper has terminated talks with Australian miner CuDeco Ltd over the potential financing and purchase of the Rocklands project in Queensland.

Xiangguang said it is evaluating other, similar opportunities.

Earlier, the company said it was talking with CeDeco for 15 percent stake in the latter's Rocklands copper project.

Xiangguang Copper is a copper refinery located in Shandong province of eastern China. It is seeking high-quality copper concentrate resources to increase its annual cathode copper refining capacity to 400,000 metric tons (tonnes).

Endocoal To Raise $17 Million

New South Wales coal miner, Endocoal, has lodged its prospectus with the Australian Securities and Investments Commission to explore for coal in Queensland's Bowen Basin.

The company had initially hoped to raise $12 million, however strong demand for the stock both in Australia and abroad has led the company to raise its target to $17 million. A European commodity trader and a Chinese coal miner are among those interested in the stock. 28.3 million new shares will be issued at 60c a share.

The company has 10 exploration tenements covering approximately 5000sq km and is focussing its exploration program on two lead projects – Orion Downs and Rockwood, where exploration drilling began in September 2009.

Results at Orion Downs have identified potential export-quality thermal coal within a number of shallow coal seams up to a total of 12 metres in thickness. Independent coal quality analysis has indicated that the coal may be suitable for export without the need for a wash plant. Drilling at Rockwood has also shown encouraging results, with thick seams of coal intersected at depths of less than 80 metres.

“Endocoal is well positioned to benefit from long-term growth and strong underlying demand in the global thermal and coking coal markets”' said managing director Rod Austin.

Trading in the shares is expected to begin on 29 April.

Queensland Coal Producers Will Make Offer For Rail Network

Queensland’s coal producers plan to lodge an offer with the state government to buy its rail network.

Former NSW state governor, Nick Greiner, who yesterday chaired a meeting of the producers’ trade forum, the Queensland Resource Council, said today that “there will be a progress meeting in three weeks, toward the end of the month” and that an offer will then be made to the government.

Yesterday, the Queensland Resource Council suggested that the Queensland Rail IPO be delayed and that the state government look at other options before proceeding later this year.

Queensland Rail is Australia’s largest transporter of coal and it is estimated that the IPO will raise A$3 billion for the government after the recession cut state revenues.

Mr Freiner said that the producers had already appointed Citigroup Inc. and Freehills as advisors to the bid and that they were “absolutely committed” to making a better bid than the IPO.

Coal Companies Want To Bid For Queensland Coal Lines

A group of coal producers want to pre-empt Queensland Rail’s impending IPO by bidding for the state’s coal rail network.

The IPO, valued at between A$3 billion and A$4 billion and due to take place in the final quarter of this year, was to have been the largest of 2010, however Queensland Resources Council chief executive Michael Roche said coal producers unanimously agreed that the privatisation was neither in the best interest of the industry nor state taxpayers.

“Coal producers - as owners of the coal track network - have a very strong incentive to ensure a high performing network and to make timely investment in new rail capacity to avoid export bottlenecks,” Mr Roche said in a statement on Monday.

He added “The coal industry is not asking the Queensland government to abandon the public float process. Rather, industry is simply asking for the opportunity to provide an alternative bid and have that industry alternative judged side by side against the public float option.”

Mr Roche’s statement followed a meeting in Brisbane on Monday chaired by former New South Wales premier, Nick Greiner and attended by mining companies including Anglo Coal Australia, BHP Billiton Mitsubishi Alliance (BMA), Ensham Resources, Felix Resources, Jellinbah Resources, Macarthur Coal, New Hope Coal Australia, Peabody Energy, QCoal, Rio Tinto Coal Australia, Vale, Wesfarmers Resources and Xstrata Coal. Mr Greiner previously worked with coal companies to resolve a dispute in the Hunter Valley in New South Wales in 2008.

The QR flotation will include the rail network and trains. Queensland is selling the assets to prop up finances after the recession cut government revenue.

Vale Denies Aquila Default Claim

Vale SA's Australian coal unit, Bowen Central Coal, has denied it is in default over infrastructure agreements for the A$1 billion Eagle Downs coking coal joint venture project with partner Aquila Resources Ltd.

The denial follows on from Aquila's statement on Tuesday that it had issued a default notice for the JV in a dispute over infrastructure arrangements. Aquila prefers to ship from Abbot Point from 2012-13 using the 69km rail line due to be completed by 2012, however Vale preference is to use the Dalrymple port, suggesting that lower costs would offset any delay. Using Dalrymple means the project will not ship any coal until 2015.

A spokesman for Vale put the dispute down to a difference of opinion: "Vale does not agree that we are in default. We and Aquila have different views about the best logistics solution for the JV. Always acting in the best interest of the JV, Vale tried to demonstrate to Aquila our views and conclusions but unfortunately Aquila refused to accept our point of view," a Vale spokesman said.

In a note to investors Patersons Securities analyst Alex Passmore said that the dispute was “clearly not positive for Aquila's relationship with Vale." The matter is now likely to go to arbitration. Aquila has set a deadline of Friday for the issue to be resolved so that contracts for the infrastructure can be signed by the end of March.

The two companies are also partners, along with AMCI Pty Ltd, in the A$2 billion Belvedere coal project, where Aquila holds a 24.5% stake and Vale 51% and Passmore believes that both companies are jockeying for position ahead of the release of the Belvedere feasibility study that is due shortly. Vale has an option to buy out its partners in Belvedere at “fair market value in the future” according to Aquila. If Vale is found to be in default then Aquila may try to buy out its share in the Eagle Downs project. It is likely to be backed in this regard by Chinese steel maker, Baosteel, who own a 15% stake in Aquila.

Meanwhile Queensland Rail has said that the billion-dollar rail link from the Bowen Coal basin to Abbot Point will not be jeopardised if the Aquila/Vale JV does ship through Dalrymple. "We have a number of customers for the GAP project, including the Northern Missing Link, and at this stage the project remains committed to proceeding, with construction expected to start in early April," spokesman Mike Carter said.

"We have a range of customers, our project is on schedule, it's aligned to a 50-million-tonne per annum project and we'll have that ready to go in early 2012."

Aquila Resources JV On Hold In Disagreement Over Infrastructure

Australian miner Aquila Resources’ coking coal joint venture with Brazilian partner Vale could be held up as the two parties sort out a difference of opinion over infrastructure.

Initially the preferred option was to use the Abbot Point coal terminal from which shipments could be made from 2012-13. The JV has been offered 4 million tonnes a year at the expanded facility, though this was subject to an agreement being concluded by the end of the first quarter of this year. Queensland Rail has selected the JV as a foundation customer for its Goonyella-Abbot Point Expansion Project, which will allow coal trains originating in Central Queensland, south of Goonyella to be directed to the Abbot Point terminal.

On Tuesday Aquila released a statement setting out its preference for Abbot Point but pointing out that in order for this option to be pursued the matter had to be resolved with Vale subsidiary Bowen Central Coal by close of business on Friday. Aquila said on Tuesday morning that it considered Bowen Central Coal’s stance a default under the joint venture agreement and has issued a default notice. BCC does not agree it is a default.

Should Vale pull out of the agreement it is highly likely that Baosteel, China’s biggest steelmaker and a 15 per cent shareholder in Aquila would back the company should it need to buy out Vale’s share of the joint venture.

Eagle Downs will be developed as an underground mine targeting 4.6Mtpa of hard coking coal from a single longwall and up to 8Mtpa once a second longwall is installed.