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World Coal
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January 2016
Coal News
Coal News
AUSTRALIA
Tinkler’s Australian Pacific Coal acquires Dartbrook coal mine
Q
ueensland Premier,
Annastaci Palaszczuk, has
officially opened the new third berth
at BHP Billiton Mitsubishi Alliance’s
(BMA) Hay Point Coal Terminal. This
move increases the export capacity from
44 million tpy to 55 million tpy. The
premier was joined by the President
of BHP Billiton’s Coal Business,
Mike Henry, and Chief Operating
Officer of Mitsubishi Corp.’s Mineral
Resources Investment Division,
Rick Tanaka, at the official ceremony.
The US$3 billion project, near Mackay
in Central Queensland, comprised the
construction of a new berth and
shiploader alongside the existing two
berths. It also included the replacement
of the existing jetty, trestle conveyors
and surge bins and linking conveyors.
“I want to thank BHP Billiton and
Mitsubishi for their confidence in the
Queensland coal export market and their
contribution to the Queensland economy,
despite coal prices having declined
markedly in recent years,” said
Palaszczuk. Queensland is one of the
world’s major exporters of coal with
shipments hitting a record of 219 million t
in the financial year to June 2015.
AUSTRALIA
Third berth at Hay Point Coal Terminal officially opened
A
ngloAmerican andAustralian
Pacific Coal (AQC) have reached a
binding agreement for AQC to purchase
Anglo’s 83.33% interest in the Dartbrook
coal mine in the Hunter Valley, New
South Wales, for up toAUS$50 million
(approximately US$36 million). The sale is
expected to be completed by mid-2016.
There will be an upfront cash payment of
AUS$25 million and the grant of a royalty
equal toAUS$3.0 for each tonne of coal
produced by the operation in the future and
AUS$0.25 for each tonne of coal sourced
from other sites and processed using
Dartbrook’s processing infrastructure.
Placed into care and maintenance in
2006 on the back of gas drainage,
geotechnical and water issues, as well as a
number of fatalities, Dartbrook was a
multiseam longwall operation with a
resource base of just over 400 million t of
low rank bituminous coal. It was also a
reasonably high-cost operation, requiring
production of about 3.5 million tpy in order
to be profitable with the cost of gas
drainage adding significantly to costs. “As
the production declined and it was
considered unlikely to improve, the mine
was placed into care and maintenance,
where it has remained, even in the height of
the mining boom,” Lloyd Hain, Senior
Consultant at CRU, explained to
World Coal
.
AQC now plans to rejuvinate the site
with a 5 million tpy opencast mine north of
the current underground workings. “The
Dartbrook JV presents a unique
opportunity to acquire a tier 1 asset that is
not only strategically located but also
well-equipped with existing infrastructure
and facilities,” said Nathan Tinkler, CEO
and Managing Director of AQC.
Despite its troubled past, Hain is
positive on the economics of AQC’s
proposal: “Based on the stated plan to
produce 5 million tpa, previous opencast
studies done on the deposit and current
industry cost structures, we estimate that
the FOB cost to the Port of Newcastle for
the opencast coal to be approximately
US$48/t in 2016 dollars, which compared
to the current Newcastle price of US$52/t
would provide a small return. However,
when taking into account the purchase
price of AUS$50 million, as well as the cost
to develop and construct the opencast
operation and connect it to the existing coal
handling and preparation plant and train
loadout infrastructure, we estimate that a
price of US$64/t would be required to
make an economic return on this
investment.“
“Considering a typical 3 – 5 yr time
frame to conduct environmental and
engineering studies and navigate the
approvals process, we believe that growing
demand for thermal coal inAsia, outside of
China, and a limited pipeline of low capital
projects, we forecast the coal price
recovering to this level within the timeframe
required to make this project economic, and
it would place this project in the second
quartile of the cost curve,” Hain concluded.
Yet developing the proposed mine may
not be an easy process – particularly when
it comes to permitting. Recent campaigns
by the thoroughbred horse industry in the
region have already seen Anglo American’s
Drayton South expansion project blocked; it
is unlikely to approve of opencast mining at
Dartbrook. The local council is also
opposed to opencast mining. This “makes
the task of navigating the approvals process
by far the riskiest part of this purchase,”
said Hain.
But Tinkler is no stranger to risk, having
already made (and lost) a fortune betting
on coal – a fuel he remains committed to
despite its current troubles: “Thermal coal
will remain one of the core sources of
energy production and if we can position
this asset to be in the lowest cost quartile
we are well placed to ride on that demand.”
