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."

Polo To Sell Stake In Mongolian JV

Polo To Sell Stake In Mongolian JV

Polo Resources is to sell its 50 per cent interest in its Mongolian joint venture with Peabody Energy to Winsway Coking Coal Holdings for the sale of Polo's 50% interest

The JV was formed to hold all of Polo's coal and uranium assets in Mongolia.

Winsway will pay a non-refundable deposit of $1.75m to Polo, which has granted exclusivity to July 20.

Polo chairman Neil Herbert said, 'We are pleased to be executing the divestment of our non-core holding in the joint venture in Mongolia.

'Polo is focused on maximising shareholder value through its uranium and coal interests in Extract Resources Limited, GCM Resources plc and Caledon Resources plc and currently has approximately $23m in cash.'

Polo, Peabody and Winsway will negotiate the terms of a sale of Polo's interests in the JV for $15m in cash, including the deposit, and $20m payable within 12 months.

In addition Polo will receive a 1% royalty for coal sold from the licences.

Cyclone Set To Hit India's East Coast

Refineries, Gas Fields And Ports on Alert

A cyclone over the Bay of Bengal is set to hit India's east coast on Thursday, putting on alert refineries, the country's biggest gas field and facilities for iron ore exports and coal imports.

The storm – known as Laila - would lash the coastal state of Andhra Pradesh in the early hours of 20 May with gusts of up to 135 kilometres per hour.


Officials at the Gangavaram port in Andhra Pradesh, a major hub for coal imports, said they were watching the situation although they were hopeful that operations wouldn’t be much affected.


Officials in Orissa state have also issued an alert although the cyclone is likely to be weaker by the time it reaches the Paradip port.

Macarthur Rejects Reduced Peabody Offer

Shares Plunge As Miner Rejects Bid

Macarthur Coal Ltd., the world’s largest pulverized coal producer, has rejected the latest bid from Peabody Energy Corp.’s saying it is too low. Macarthur’s two biggest shareholders, Citic and ArcelorMittal are also expected to reject the bid.

Peabody reduced its offer from A$16 a share to A$15 a share, citing its due diligence review of Macarthur’s finances and the Australian government’s plan to bring in a ‘super tax’ on mining companies’ profits.

Shares in Macarthur fell over 20 per cent on the news to close at A$11.25 a share.

Kangaroo To Complete Indonesian Coal Acquisition

Five More Coal Mines To Be Added To Portfolio

Australian mining company Kangaroo Resources is to acquire five Indonesian coal projects, after completing its due diligence. The company announced its plan to buy the projects late last year.

Drilling will soon commence at Kubah Indah, where the company’s exploration target is for 100-400 million tonnes of coking coal.

The company said this drilling program will be conducted in parallel with the ongoing ramp-up of production at its other Indonesian operations.

Prior to announcing these latest acquisitions Kangaroo already had two coal mines in Indonesia.

Managing Director Mark O’Keeffe said “The completion of due diligence was high on our list of priorities and, as expected, the projects were found to be technically and legally sound.”

“Kubah Indah in particular will become a very important project for us and, in combination with the Mamahak Project, will form the backbone of our coking coal production profile in the future."

“We will now move quickly towards the commencement of an initial exploration programme at Kubah Indah, and over the coming months we expect to be able to delineate a significant JORC resource,” added Mr O’Keeffe.

Kangaroo has issued 300 million shares to the projects’ vendors as consideration for the acquisition and these would be issued once its shareholders approve the deal.

Kangaroo recently announced an export sales contract with Chinese energy company, Yudean Farnon.

The contract involves three trial shipments of a total of 150,000 tonnes of coal over a two-month period. The deal will then be extended with pricing linked by a formula to the Chinese Coal Index.

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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.

Peabody Cuts Macarthur Bid

New Tax Said To Be Behind Bid Cut

United States coal miner Peabody has cut its offer for Australia’s Macarthur in a move which seems to have been triggered by the Australian government’s plan for a 40 per cent tax on mining companies’ profits.

Peabody has dropped its bid for Macarthur Coal Limited from A$4.07 billion (US$3.67 billion) to A$3.82 billion after completing its due diligence and after the announcement by the government on the 40 per cent ‘super tax’ at the start of last week.

"The definitive proposal delivers a clear, compelling and significant premium for Macarthur shareholders, and follows Peabody's due diligence as well as the introduction of the Australian resources profit tax proposal," it said.

The revised offer is for A$15.00 per share. Peabody's first bid was for A$13 per share and was followed by further offers of A$14 and A$16 per share. Macarthur’s shares – which had been trading higher than the current offer in the middle of April – closed at A$13.38 in Sydney on Monday.

Macarthur's board has rejected two Peabody bids as well as a bid from Australia's New Hope in favour of its own takeover of Gloucester Coal. However, that was rejected last month by Noble Group, a key Gloucester shareholder in a move which would have given Noble a 24 per cent stake in Macarthur and which would most likely have thwarted the Peabody bid. Noble says it is no longer interested in that transaction.

In response to the new offer, Macarthur continued to advise shareholders to take no action until its directors had reviewed the offer. It is believed that the Macarthur board is set to meet in the next couple of days.

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Xstrata To Get More For Its Australian Coal

Prices up by up to 114 per cent

Coal miner Xstrata says it has settled most of its annual Asian thermal coal contracts in at a price level some 38 per cent higher than it achieved last year.

Quarterly semi-soft coking coal prices have risen 114 per cent and the company says its production of coking coal in Australia has risen 83 per cent.

Macarthur Coal Says Profits May Fall

Macarthur Income May Be 39 Per Cent Down

Australian coal miner Macarthur Coal Ltd has said that full-year profits may fall as much as 39 percent from a year ago after a fall in prices.

Net income may be A$103 million to A$113 million for the year ending 30 June from A$168.6 million in 2009, the company said in a statement to the Australian stock exchange.

Macarthur is currently the target of a A$4.1 billion ($3.8 billion) takeover offer from America’s Peabody Energy.

“Profitability in the June 2010 quarter has improved given recent coal price settlements with higher prices starting April 1”, the company said in the statement. Macarthur said it is still on course for full-year sales volumes of 4.8 million to 5.0 million tons.

Coking coal prices have risen sharply in recent months after the global steel industry came into recovery. A number of global coking coal suppliers including BHP Billiton, Rio Tinto and Teck Resources won a shift from annual to quarterly contracts and a rise of 55 per cent for supplies in the April to June quarter. Australia’s Centenntial Coal also warned of a tightening in the global supply of the product.

Peabody asked Macarthur, the world’s largest exporter of pulverized coal, for more information after completing a review of its finances yesterday. The American miner is also said to be concerned after the Australian government announced on Sunday that it plans to bring in a new 40 per cent tax on mining company’s profits. Macarthur said on Tuesday that the new tax had a brought an air of uncertainty to the industry.

Third Coal Terminal Opens At Newcastle

Terminal Opens to Protests from Unions and Environmentalists

A third coal export terminal has opened in Newcastle, New South Wales, at a cost over $A1 billion.

Owner Newcastle Coal Infrastructure Group (NCIG) says the expansion is needed because of continued strong export demand and the step will keep a workforce of 800 busy for another two to three years.

NCIG won the right to construct the third terminal three years ago. The new terminal – stage one - will take shift as much as 30 million tonnes a year. NCIG will now turn to plans for stage two which will take capacity to 66 million tonnes a year.

"Stage two will double the capability of stage one, adding more than $600 million a year to state revenue through royalties and attract extra investment of more than $1 billion to New South Wales," NCIG chairman Tony Galligan said in a statement.
However, the new terminal has incurred the wrath of trade unions and environmentalists.

About 100 members of the Maritime Union of Australia gathered outside the terminal this morning angry that workers at the new terminal are paid 17 per cent less than those at nearby terminals.

Greens MP Lee Rhiannon said the project would lock the region into what she described as “coal dependency".

"The New South Wales government should be working with the people of the Hunter on a transition plan involving restructuring of industry and retraining programs for workers in clean energy delivery and manufacturing," she said in a statement.
"This coal terminal will drive the opening up of coal mining in the Upper Hunter, Gloucester and Liverpool Plains.

"The resulting increase in coal exports is a setback for dealing with climate change."

Meanwhile, environmental protesters painted "quit coal" in large white letters on the side of a bulk carrier bound for Japan.

Noble May Make Fresh Approach To Macarthur

New Offer May Come This Week

The Australian Financial Review’s Street Talk column reported in its Wednesday edition that Noble Group Ltd may be preparing to make a new approach to Macarthur Coal as early as this week.

Last week Noble saw a deal rejected by its shareholders in which it would have become the largest shareholder in Macarthur.

Macarthur is currently in talks with US miner Peabody Energy Corp., which has made a A$4.1 billion cash offer for the company.

Coal India To Sign Vizag Port Deal

Coal India To Sign Vizag Port Deal

Coal India Ltd (CIL) is expected to sign a deal to acquire space at Vizag Steel’s port in Visakhapatnam.

CIL Chairman, Partha Bhattacharya, , said the company is looking to go in for joint venture or acquire parts of existing ports rather than setting up its own.

“We are more or less close to signing a deal with Vizag Steel to start with. RIL/RINL has moved out of Vizag Steel so that space has been offered to us and we have accepted it for our imports. Compensation needs to be discussed. A 4-5 million tonne capacity would be available to us at any point in time,” he said.

CIL is also in talks with other ports, including Gangavaram, Dhamra, Krishnapattanam, and Kandla and is also looking at coal-bed methane and coal mine gasification projects, though Mr Bhattacharya said water contamination problem was a concern.


“As long as there is no definite solution (to the water contamination problem) we can’t risk it because we don’t have coal in barren places. But if there is any technology evolving anywhere in the world, we will take it. We are seriously looking at underground coal gasification projects,” he said.

Coal India Ltd. may also spend $1.7 billion to buy stakes in five mines in Australia, Indonesia and the U.S. to help bridge a shortfall in Asia’s third-biggest energy consumer.

White Energy To Buy South Australian Coal Ltd

Deal Gives Access to 500mn Tonne Resource

New South Wales’ White Energy is to buy South Australian Coal Limited in a $A39.3 million all-share deal.

The deal will give White Energy access to SA’s 500 million-tonne coal resource at Lake Phillipson, about 60 kilometres south of Coober Pedy in the far north of the state.

White Energy MD, John Atkinson, says shareholders in SACL are reinvesting $100 million back into White Energy, which it will add to its overall funds.

"The key figures in the South Australian coal company are putting their money where their mouths are and that'll give White Energy in excess of $200 million and we'll then use funds to exploit the opportunity at Lake Phillipson and also exploit the opportunities in other coal markets," he said.

Lake Phillipson coal will also be benefit from processing by White Energy to enable it to be exported.

"That process takes high-moisture coal and effectively reduces the moisture content and creates a high-energy and high-value thermal coal out of what started as a high-moisture low-energy coal," he said.

SACL was spun-off from Felix Resources when Felix was taken over last year by Chinese state-owned Yanzhou Coal Mining last year.

Under the bid, SACL shareholders are being offered 0.07985 WEC shares for each share held. They could also receive an additional 21.61 cents per share if additional coal resources are defined in SACL's existing tenements.

Alternatively, SACL shareholders can receive 19.96 cents per share in cash, up to a maximum aggregate of all shareholders of $10 million.

SACL's independent directors have unanimously recommended the deal, in the absence of a superior proposal.

Noble Shareholders Reject Gloucester Coal Sale

Trader Also Does Not Agree With Peabody Offer

Singapore commodity trader Noble Group said on Monday that its shareholders have rejected a resolution proposing the sale of the firm's stake in Gloucester Coal to Macarthur Coal. The company said the proposed conditions give different options to large and small shareholders.

The resolution, rejected by shareholders voting at a meeting in Hong Kong, would have given the firm a 24 per cent stake in Australia's Macarthur, the subject of rival bids as firms compete for its cleaner coal.

Noble also said in a statement it did not agree with US coal company Peabody Energy's proposed $16 per share takeover of Macarthur.

"Having come up the hard way, and in the not too distant past being pretty small ourselves, we are very opposed to the spirit of the Peabody transaction," the company said in a statement.

Macarthur To Talk To Peabody

Large Shareholders may keep stakes in company

The board of Macarthur Coal has said that it will open talks with Peabody, following the American company’s latest $16-a-share offer that values Macarthur at $4.07 billion.

Peabody will be granted a five day period of due diligence.

However Macarthur said an extraordinary general meeting scheduled for Monday to approve its takeover of Gloucester Coal has been postponed to a date, time and venue to be advised.

The moves came after two of Macarthur’s largest shareholders, Korean steel mill Posco with an 8.3 per cent stake and international steel company, ArcelorMittal, which has a 16.6 per cent shareholding in Macarthur, gave a guarded welcome to Peabody’s latest offer.

POSCO said that it "confirms its in-principle support for a Peabody-led privatisation of Macarthur" while ArcelorMittal stated "that the Peabody offer is one that warrants due consideration". Macarthur’s largest shareholder, China’s Citic, has yet to indicate its support for the offer. Peabody has indicated that Macarthur’s three largest shareholders may be allowed to keep their stakes in the company.

The deal to buy Gloucester Coal and a stake in Hong Kong-based Noble Group’s Middlemount project in Queensland would have given Noble at 24 per cent stake in Macarthur. Industry-watchers are suggesting that this deal is now dead as Macarthur begins its engagement with Peabody. However, Macarthur is yet to officially recommend Peabody’s latest bid which could leave the way open for a bid from another mining giant, Switzerland’s Xstrata.

Tata To Send Mozambique Coal To Europe

Benga Coalfield Inaugurated

Tata Steel is expected to start sending coal to its Corus operations in Europe from a new $1 billion coalfield in Mozambique by the end of this year.

The groundbreaking ceremony was attended by Mozambique’s president Armando Emilio Guebuza, who officially inaugurated the Benga coal project in the country’s Tete province on Tuesday.

Tata has a 35 per cent stake in the project, with the remainder held by an Australian company, Riversdale Mining, in which Tata has a 21 per cent stake.

Tata has the right to buy 40 per cent of the mine’s two million tonnes a year initial output, 85% of which is good quality hard coking coal with the remainder low ash thermal coal. Production is expected to rise to almost 8 million tonnes over the next few years. The same level of production is likely to continue for 25 years at least.

No Plans To Sell Macarthur Stake - POSCO

Stability of supply is reason for stake

South Korean steelmakers POSCO, has reiterated its desire to hold on to its stake in Australian miner, Macarthur Coal, in the face of a bidding war.

"Ninety-nine percent of our investment purpose in Macarthur is to secure a stable supplier," Kwon Young-tae, POSCO's senior vice president, told Reuters after a conference with analysts.

POSCO will continue to review the proposed merger between Macarthur and Gloucester saying it had made no decision yet on whether to support the deal.

POSCO is one of Macarthur’s three largest shareholders. The Australian miner has rejected bids from America’s Peabody Energy and Australia’s New Hope. Global miner Xstrata has also been rumoured to be preparing a bid.

An archive on the Macarthur takeover battle is available here.

Orissa To Release Mining Policy Plan

5% Royalty Likely To Be Imposed

The government in the Indian state of Orissa government is to release policy guidelines regarding mining in the state.

The policy, which is aimed at developing and regulating the local mining industry, will focus more on the non-ferrous sector and comes at a time when issues such as illegal mining and land acquisition have come to the fore.

Industries to be affected by the guidelines are expected to below volume, high value non-ferrous minerals like gold, nickel, platinum and beach sand, however, the ferrous sector is likely to be affected by guidelines on the profitable use of low grade ores by using state-of-the-art technology in the benefication, sintering and pelletising process.

The state government has decided in principle that a royalty of 5% will be used for the development of people living mining areas. A committee has been formed to formulate the policy for the implementation of this decision.

Orissa has 17% of India’s total mineral reserves with 174 million tonnes of nickel ore, 82 million tonnes of beach sand minerals, 1,802 million tonne of bauxite, 180 million tonnes of chromite, 5,305 million tonne of iron ore and 65,353 million tonne of coal. There are also deposits of cobalt, copper ore, dolomite, lead & zinc ore, limestone, tin ore.

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.