MetRes delays Queensland underground coal mine

Market: Coal, Coking coal
27/02/23

First coal from the 1.2mn t/yr Millennium and Mavis Downs underground mine in Queensland has been delayed until the second half of 2023, according to joint owner, Australian mining firm Stanmore Coal.

MetRes, which is a 50:50 joint venture between Stanmore and Australian firm M Resources Trading and owns the mine, had hoped to start underground mining in 2022, but flood damage and geological variations have pushed back first development coal to July-December 2023. The joint venture produced 473,000t of hard coking coal in 2022 from the legacy open pit mine and by auger mining from available highwalls.

Mavis Downs produces hard coking coal, which last traded in the spot market in 2016. Millennium produces hard coking coal and pulverised coal injection brands, which last traded in late 2019. Mavis Downs had 11.8mn t of measured resources on 31 December 2022 and Millennium 6.8mn t.

Stanmore's total saleable coal production rose to 9.2mn t in 2022 from 2.1mn t in 2021, with ambitions to pass 12mn t/yr in 2023, largely owing to the inclusion of the BHP Mitsui Coal (BMC) assets that it acquired in May last year.

The firm reported a profit of A$727mn for 2022, up from $7mn in 2021 because of higher production and strong prices. It has cut its debt on completion of the BMC acquisition by 54pc from a peak of A$795mn to A$363mn on 27 February. Stanmore has a number of organic growth options following the BMC acquisition, but is also open to growth through acquisition.

Argus last assessed premium hard low-volatile coking coal prices at $346.10/t fob Australia on 24 February, down from a high of $396.65/t on 17 February but up from a low of $245.70/t on 23 November 2022. Argus' 24 February assessment of Australian low-volatile PCI at $318.90/t fob Australia decreased from $372.15/t on 17 February but was up from $235.25/t on 23 November last year.

The Millennium and Mavis Downs coking coal mine complex is 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.

The Millenium and Mavis Down redevelopment joins a growing list of coking coal development projects that could add more than 100mn t/yr of coking coal capacity in Australia if prices remain strong enough to stimulate investment.

MetRes agreed to acquire Millennium and the adjacent Mavis Downs mines from US energy firm Peabody in April 2021.

By Jo Clarke

Australian metallurgical coal prices $/t

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