Resource News

Xstrata Plans A$6 Billion Power-Station Coal Mine in Australia

Feb. 1 (Bloomberg) — Xstrata Plc, the world’s largest exporter of power-station coal, plans to develop a A$6 billion ($5.3 billion) mining, port and rail project in Queensland to benefit from increased demand for the fuel.

Wandoan, 407 kilometers (253 miles) northwest of Queensland’s capital Brisbane and 382 kilometers southwest of Gladstone port, may start exporting the fuel by 2014, James Rickards, a spokesman for Xstrata, said by phone. The project may initially produce 30 million metric tons per year, he said.

Demand continues to grow from Asian electricity producers and supply remains constrained because of rail and port bottlenecks in Australia and South Africa, Citigroup Inc. said in a Jan. 25 note. Developing Wandoan to produce 100 million tons per year may cost A$15 billion, the Australian newspaper said today, without saying where it got the information.

“We are going to see a definite increase in thermal coal demand for energy, specifically across developing nations,” Rickards said. Feasibility studies into the Wandoan development are forecast to be completed by the end of the year, he said.

The project area has three other regions with an exploration target of between 4.1 billion to 7.7 billion tons, Rickards said. Development of additional mines at Wandoan is not expected until the “early 2020s,” he said.

Xstrata owns 75 percent of Wandoan and Japan’s Itochu Corp. and Sumitomo Corp. each hold 12.5 percent of the project. Coal may be exported through a new port, yet to be developed, 40 kilometers north of Gladstone, Rickards said…read more at the Bloomberg