BHP opens Caval Ridge mine in Queensland

UK-Australian mining company BHP Billiton officially opened its Caval Ridge coking coal mine in Australia's Queensland today, three months ahead of schedule.

The 5.5mn t/yr mine, located in the Bowen basin, is a 50-50 joint venture between BHP and Japanese trading house Mitsubishi. It is the BHP Billiton Mitsubishi Alliance's (BMA) eighth operation in the region.

Coal at the mine will be mined via an open-cut dragline and truck and shovel operation, exported from the BMA-owned Hay Point Coal Terminal. Caval Ridge began production operations in the April-June quarter, producing 563,000t for the period.

Shipments of standalone Caval Ridge coal have yet to be seen offered on the spot market, market participants said. It is likely to be instead featured in BHP's blended coal brands, but the producer does not disclose what goes into these blends, a Singapore-based trader added.

BHP markets blended top-tier premium low-volatile hard coking coal brands like Peak Downs North and Goonyella C. These brands that were launched earlier this year have gained traction in the spot market as depressed steel prices weigh on demand for more expensive straight coal.

Despite a 26pc year-on-year slump in spot premium low-volatile hard coking coal prices that are now assessed at $110.50/t fob Australia, cost-conscious buyers in India and China are seen keen on buying more of BHP's blended coal brands to further cut their raw material costs.

Blended material typically deals at a 4-5pc discount from other straight coal brands, market participants said.

BHP expects its 2014-15 fiscal year coking coal production to increase by 4pc to 47mn t led by new volumes from Caval Ridge.

mt/rjd

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