Mining leases EA approved
Wesfarmers expanding its coal business despite being open to purchase offers.
Wednesday 15 February 2017
Wesfarmers say they're making “good progress” on plans to extend the life of Curragh mine at Blackwater beyond 2030, after receiving Commonwealth approval for some nearby mining lease applications.
Three years ago Wesfarmers paid Peabody $90 million for a Mining Development Licence (MDL) which they now want to convert to a Mining Lease which would allow them to start mining.
The area covered by the MDL contains about 250 million tonnes of mostly steelmaking coal, of which about 70 million tonnes is highly drilled and classified as proven and probable under JORC reporting rules.
Importantly for Wesfarmers, the MDL is located between the existing Curragh North and Curragh South mining operations, meaning the coal can be exploited without any new processing infrastructure.
At the time of the purchase, Managing Director Stewart Butel said the purchase from Peabody boosted the amount of coal that could be processed through existing Curragh infrastructure by nearly a third.
Pushing ahead with expansion alternatives is yet another sign that the region's biggest miners believe the worst of the downturn is behind them.
Record coal prices, the use of contractors, better weather and a revised mine plan at Curragh have helped owner Wesfarmers to deliver a $138 million before tax profit in the first half of this financial year.
The result is 24% higher than for the same period a year ago, and a way exceeds Wesfarmers own expectations at the start of 2016.
Looking to 2017, Curragh said this week they expect coal prices will remain hard to predict.
“Thermal and metallurgical coal prices are expected to remain highly volatile for the remainder of the 2017 financial year, with recent spot prices trading significantly below the November 2016 peak of US$311 per tonne,” they said.
“Seaborne supply has increased, however, Chinese policy appears to be indicating a preference for a stabilised price.
“The focus for the business will remain on improving operational productivity, cost control and capital discipline.”