Callide deal finalised
A VERY different deal to Blair Athol, Foxleigh and Isaac Plains transactions.
Wednesday 02 November 2016
It took more than six months longer than expected, but private company Batchfire Resources has officially taken control of the Callide mine near Biloela.
Neither company has released any details on the price paid for the mine - although the sale is on a walk in, walk out basis and includes all plant and equipment.
The recent sale of the Isaac Plains and Blair Athol mines were defined by calculating the asset value based on a very depressed coal price and outlook, and then subtracting the restart and environmental rehabilitation costs.
That explains why you have a situation at Blair Athol where the sale price was just one dollar and the seller Rio Tinto also threw in $80 million for rehabilitation costs to sweeten the deal.
However, in this case, only the cost of the environmental liabilities can be viewed in the same light, because Callide is being sold as an operating mine, and following a major spike in global coal prices.
In an average year, Callide produces around 8 million tonnes of thermal coal, most of which is sold directly to local coal-fired power plant operator CS Energy - based on a pricing formula that essentially tracks global coal prices.
This year production at Callide was down to around 5 million tonnes probably reflecting both lower coal prices and lower demand from CS Energy.
However interestingly, at the same time as Batchfire negotiated to buy the Callide mine from Anglo, a spokesperson for CS Energy told Shift Miner they have also renegotiated the pricing formula for Callide mine coal.
“CS Energy has negotiated with Batchfire amended terms to the Coal Supply Agreements (CSAs) that will ensure the ongoing supply of coal to the Callide Power Station at a consistent quality and quantity,” the spokesperson said.
“Details of the CSAs remain commercial-in-confidence, but the amended CSAs will enable CS Energy to plan the operation and maintenance of the power station with a renewed level of confidence and greater certainty.”
Batchfire isn't releasing any details on whether it plans to resume development work on the halted Boundary Hill expansion.
However Chief Executive Officer, Peter Westerhuis says they met with their workforce to provide details about where they're headed.
“With significant remaining recoverable thermal coal reserves, Callide Mine has a bright long-term future as a low-cost domestic and export producer,” Mr Westerhuis said.
“Batchfire’s acquisition is on a ‘walk-out, walk-in’ basis meaning that Callide Mine will continue to operate uninterrupted.
“Our priority is to engage with the Callide workforce, contractors, suppliers and the broader community to ensure the smoothest possible transition after six years of uncertainty over the mine’s future direction, which I can assure them is positive.”
Callide is an open cut Dragline, truck and excavator operation comprising four pits: Dunn Creek, Trap Gully, The Hut and Boundary Hill.
Run of Mine reserves are approximately 220 Mt of domestic and export thermal quality coal, with an additional 525 Mt of mineable in-situ resources outside the current mine layout.Between 400 and 500 miners plus contractors are employed at the mine, and Labour Hire business Workpac is currently advertising for a number of casual positions for mobile plant operators.