Mixed results in plan to revitalise Australian coal hub

  • Market: Coal, Coking coal
  • 15/12/22

Australian private-sector firm Futura plans to deliver coal from the 3mn t/yr Wilton-Fairhill project in Queensland to Japanese firm Sojitz's Gregory-Crinum mine in mid-2023, but the Gregory-Crinum underground mine itself remains stalled because of a contractor dispute.

Futura will begin building the Wilton-Fairhill coking and thermal coal mine in central Queensland early next year, after receiving final approvals for the project from the state government. It plans to begin producing coal by mid-2023 and will use infrastructure at Sojitz's nearby Gregory-Crinum mine to process and load the coal onto trains bound for the port of Gladstone.

Sojitz was due to ramp up its 1mn t/yr underground mine at Gregory Crinum earlier this year, after it was delayed from late 2021 as a result of an accident that killed a worker. But it has taken longer than expected to recover from the fatal rock fall, and mining contractor Mastermyne has notified Sojitz that it will terminate the contract and claim costs.

Sojitz is assessing its options, including taking over the mining operation directly, and does not expect to start mining underground until October-March 2024 at the earliest. "We do not want to rush this process," Sojitz chief executive Masayoshi Fujimoto told investors in November. This means that volumes from the underground portion are likely to be minimal for the firm's fiscal year ending 31 March 2024.

The 2.5mn t/yr Gregory-Crinum open pit operation is still operating, with the mine expected to contribute around 1.5mn t to Sojitz' coking coal sales in 2022.

Sojitz completed the A$100mn ($67mn) acquisition of Gregory-Crinum from Australian resources firm BHP in March 2018. BHP, through its joint venture BHP Mitsubishi Alliance, had closed the open-cut part of the Gregory-Crinum mine in 2012 and announced the closure of the underground section in late 2015, after several failed attempts to sell it as a going concern when premium hard coking coal prices had fallen to around $80/t fob Australia.

Argus last assessed the premium hard low-volatile metallurgical coal price at $253.25/t fob Australia on 14 December, down from $320.80/t on 4 November, but up from $203/t on 5 August.

Sojitz's operations in Australian include the 2.3mn t/yr Minerva and 1.5mn t/yr Meteor Downs South thermal coal mines in Queensland, as well its interests in the 8.8mn t/yr Lake Vermont and 5.1mn t/yr Jellinbah coking coal mines in Queensland operated by Australian producer Jellinbah.

The Wilton-Fairhill mines have the capacity to produce high-quality, mid-volatile, high-fluidity, ultra-low phosphorus coking coal, as well as some secondary higher ash thermal coal.

Australian coal price comparisons $/t

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