Australian coal assets have sparked a
shake-up in the industry, with the
emergence of a number of newer
players backed by private equity.
Among recent sales in the states of
New SouthWales (NSW) and
Queensland were Stanmore Coal’s
noteworthyAUS$1 acquisition of the
Isaac Plains mine in Queensland from
Sumitomo and Vale; Rio Tinto’s sale of its
Bengalla mine in NSW to NewHope for
AUS$865 million; and a number of other
transactions of undisclosed value or
which had yet to be finalised to otherwise
new investors, such as Sydney-based
Taurus Funds Management and
Indonesia’s SalimGroup.
Stanmore Coal Managing Director
Nick Jorss said his company had looked
at more than 50 opportunities in the
past few years before doing its
“fantastic” deal in the Bowen Basin to
acquire Isaac Plains and the adjacent
Isaac Plains East.
“We kissed a lot of frogs to find the
right assets…The deal put together two
adjacent assets, which gave us all the
infrastructure of an existing mine with a
significant, low-cost mine life extension
to 10 yrs,” he said.
On 6 April, the Brisbane-based
company announced its first
metallurgical coal production at Isaac
Plains, with its annual output
contracted to Japanese and
South Korean steel mills.
Jorss said his company had made the
mine profitable by slashing production
costs by 35%, cutting production from
the previous 2.8 million tpy to
1.1 million tpy and benefitting from
established infrastructure. Yet while
Stanmore Coal’s deal has proved
successful, some seven of nine other
recent mine ‘sales’ had yet to reach
settlement as of April 2016.
“I expect there will be more deals
closed – you’re certainly seeing a lot of
assets on the market at the moment.
Anglo has publicly said they’re selling
and there are a number of others
looking to exit,” Jorss said.
Jorss pointed to the 150 jobs
generated by Isaac Plains’ restart as part
of the benefits of the new investment.
According to the Queensland
Resources Council (QRC), the
state’s resource sector has shed 23 000
jobs in two years, with falling
investment threatening the livelihoods
of the industry’s remaining 60 000
workers.
Exploration expenditure nationwide
fell by 37% to AUS$213 million in the
calendar year 2015, although production
is expected to have risen by 4% to
260 million t due to increased output at
existing operations and the start of new
mines, including Whitehaven Coal’s
Maules Creek, according to the
Australian government’s forecaster, the
Department of Industry, Innovation and
Science.
“Given the current market, growth
isn’t at the top of many coal operators'
priority lists at the moment. However,
the recent grant of a mining lease to
Adani’s Carmichael project was the first
mining lease granted for the next great
Queensland mining province, the
Galilee Basin, opening the door for
thousands of jobs across regional
Queensland,” QRC Chief Executive
Michael Roche said.
Environmental and legal
battles
After injecting an estimated
AUS$26 billion into the NSW and
Queensland state economies in fiscal
2015, along with AUS$2.7 billion into
state coffers, the industry’s growth
prospects have been constrained by
increased environmental and legal
challenges.
Despite winning Queensland
government approval on 3 April, the
AUS$21.7 billion Carmichael thermal
coal mine and rail project in the state’s
emerging Galilee Basin has been
hamstrung by a six-year-long legal
process that shows no sign of
concluding. On 27 April,
conservationists launched the eighth
legal challenge to the project, arguing
that its approval “ignored climate
change totally.”
The legal battle is estimated to have
cost the Indian giant an estimated
AUS$120 million, sparking calls for an
urgent review of the environmental
approvals process.
Commenting on news of another
legal appeal against the project on
13 April, QRC Acting Chief Executive
Greg Lane said: “The announcement of
another appeal lodged by an
Indigenous group adds yet another
delay to the vital job-generating project
that regional Queenslanders are relying
on after the massive downturn in the
resources sector.
“Even the Minister for Natural
Resources and Mines, Dr Anthony
Lynham has said, ‘everyone deserves
their day in court, but not four years in
court,’ and even he conceded after the
Adani decision that the project was
likely to face further legal hurdles.”
Meanwhile in NSW, development of
the Caroona and Watermark thermal
coal projects on the Liverpool Plains has
stalled amid environmental challenges
and falling prices, despite an estimated
AUS$1 billion worth of investment by
BHP Billiton and China Shenhua,
respectively over the past decade.
The re-emergence of coal workers’
pneumoconiosis (Black Lung) more
than 30 yrs following its apparent
eradication in Australia has also put the
spotlight on the industry’s health and
safety record, adding to the pressure
from activists seeking to curb coal-fired
power in favour of renewable energy.
Defending the coal industry’s
environmental policy, the QRC’s Roche
said: “Coal does not run away from the
fact that use of coal generates carbon
emissions. However, technology exists
to address these emissions, allowing
continued use of coal in a low‑emissions
future. High-efficiency, low-emissions
(HELE) technologies – involving use of
higher temperature and pressure steam
conditions – could reduce global CO
2
emissions from electricity generation by
as much as 40%. These technologies are
available and being deployed now in
countries such as Japan, China, Korea
and India.
“Complementing HELE technologies
are the carbon capture and storage
(CCS) technologies involving capturing
CO
2
emissions from power station flue
gas and storing them, safely and
securely, deep underground. There are
15 large-scale CCS projects currently
operating around the world and a
further seven under construction. CO
2
capture technologies are being
developed by global equipment
suppliers and will be commercially
available when required. In
18
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World Coal
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June 2016
