Coking coal removal to start at Australian mine

Australian joint venture MetRes has appointed contractor Coal Augering Services (CAS) to exploit low-capital-cost coal in the Millennium and Mavis Downs metallurgical coal complex in Queensland to provide cashflow while it moves ahead to develop the underground mine.

CAS will start removing coal in July for a year ahead of the move to underground mining in mid-2022, according to Australian firm M Resources Trading, a joint-venture partner of Australian mining firm Stanmore Resources in MetRes. The joint venture agreed to acquire Millennium and the adjacent Mavis Downs mines from US energy firm Peabody in April, and M Resources expects the deal to be completed in June.

CAS will auger the coal, which involves drilling into the bottom of the existing open-pit mine to extract coal without the need to remove overburden. This is the fourth auger contract that CAS has had at the Millennium and Mavis Downs mine complex. The last one was in 2016 when Peabody used their services to deliver around 100,000t of coal to the washplant over five months.

The site has an estimated 2mn t of coal reserves for the open-cut and auger operations and another 5.4mn t from underground seams.

Mavis Downs produces hard coking coal, which was last traded in the spot market in 2016. Millennium produces hard coking coal and pulverised coal injection (PCI) brands, which last traded in late 2019. The awarding of the auger contract comes as hard coking coal prices rally after two months at levels that make some Australian coking coal mines uneconomic to run. This follows an increase in the PCI price late last year and early this year, which culminated in it briefly trading ahead of the premium hard coking coal price at the start of this month.

Argus last assessed premium hard low-volatile coking coal prices at $148.05/t fob Australia on 27 May, up from $110.75/t on 16 April when MetRes announced the deal to buy Millennium and Mavis Downs. Meanwhile, Argus' assessments of Australian low-volatile PCI have fallen to $106.65/t fob Australia from $108.50/t over the same period.

The Millennium and Mavis Downs coking coal mine complex is strategically located close to Stanmore's existing Isaac Downs project near the town of Moranbah in Queensland, a mature mining region that gives the project good access to established infrastructure, product blending and other operational savings.

By Jo Clarke