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Australia: Queensland Fast Tracks Valeria Coal Mine

 

 

By Jo Clarke

June 15, 2020 - The Queensland government will fast track approvals for Switzerland-based mining firm Glencore's A$1.5mn ($1bn) Valeria thermal and coking coal mine, as it seeks to boost the state's economy in the wake of the COVID-19 pandemic.

The state has made the 20mn t/yr run-of-mine Valeria mine and associated infrastructure a co-ordinated project, which aims to speed up approvals and smooth its progress through the planning processes. The federal government announced plans today to significantly cut the approvals process for a series of key projects, including some in the resources sector, to increase employment and boost the national economy as it recovers from the effects of the pandemic.

Glencore bought Valeria as part of an $1.7bn deal to acquire the Hail Creek coking coal mine from UK-Australian mining firm Rio Tinto in 2018. The Valeria project contains enough high-quality metallurgical and thermal coal to maintain production for 35 years, according to a submission to the Queensland government.

Many Queensland coal mining firms are shelving expansion projects and others are cutting back on production because of weaker demand for seaborne coal in several key markets following COVID-19 disruptions.

Valeria is in the south Bowen basin, within easy access to the Central Queensland Coal Network, which would allow access to any of the state's four main coal export ports. Glencore is considering options at Abbot Point and Dalrymple Bay Coal Terminal. But is most likely to chose Gladstone, where it is a major shareholder in the under-utilised Wiggins Island Coal Export Terminal (Wicet).

The 27mn t/yr Wicet is operating at around 50pc capacity and struggling to increase throughput because it is higher cost than other Queensland ports. This makes it hard for the port to pay off its debts, despite securing an extension on payment terms. Until it pays down its debts it is forced to keep handling fees high, which is making it hard to attract more users.

Wicet last week lost a High Court appeal designed to force former shareholder and potential user New Hope Coal to pay access fees for its Colton coking coal project, putting further pressure on the port's finances and on main shareholder Glencore.