Anglo awards $176mn of Australian coal mine contracts

  • Market: Coking coal
  • 24/11/20

UK-South African mining firm Anglo American has awarded A$240mn ($176mn) of contracts for its 3.5mn t/yr Aquila project in Australia that is on track for first longwall production of premium quality hard coking coal in early 2022.

Anglo American has awarded contracts worth almost A$200mn for two complete longwalls, which will be delivered to the mine ready to start operation. This should simplify the start up at Aquila, which will extend the life of the firm's Grasstree underground coking coal mine in Queensland by six years to 2028.

Anglo has been beset by safety problems at its other Australian operations this year, with a methane gas explosion closing its Grosvenor mine until at least the second half of 2021. This followed the firm cutting its coking coal production guidance for 2020 in February from 21mn-23mn t after a roof collapse at its 6.5mn t/yr Moranbah North in Queensland mine in January. The explosion at Grosvenor has raised questions over Anglo American's ability to safely manage underground coal mines in Queensland.

"Aquila will be a breakthrough project, designed to set a new standard of safety and performance by leveraging technology and focusing on operational improvements," Anglo American's metallurgical coal business chief executive Tyler Mitchelson said.

Anglo American approved the Aquila development in July 2019 when premium hard low-vol coking coal prices were at around $185/t fob Australia. Argus last assessed this price at $98.75/t on 23 November, the lowest since the middle of 2016. The price was driven lower from a recent high of $136/t at the beginning of October by Beijing's introduction of a ban on imports of Australia coal from the middle of October. Suppliers hope that the Chinese ban will be revoked when new quotas are implemented at the beginning of the new year.

Development at the Aquila site, which is part of Anglo's 6.5mn t/yr Capcoal mining complex in the Bowen Basin, began in September. There are some 500 people working on engineering, surface construction and underground development.

The Grasstree mine produces the German Creek premium low-vol hard coking coal brand.

Anglo owns 70pc of Aquila, with Japanese conglomerate Mitsui holding the other 30pc through the Capcoal joint venture.


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