Engineering & Mining Journal

OCT 2018

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Page 25 of 91

NEWS - THIS MONTH IN COAL 24 E&MJ • OCTOBER 2018 Peabody Fights Fire at North Goonyella Peabody has developed a multitiered plan in an effort to extinguish a fire at its North Goonyella mine in Queensland and con- tain the impacts. The plan was reviewed by the Queensland Mine Inspectorate and is undergoing implementation. The un- derground mine and surface areas remain restricted to access through exclusion zones while the work continues. The elements of the plan include im- plementing use of a mobile GAG unit, a specialist piece of equipment that gener- ates high-moisture inert gases to displace oxygen supply at a fire zone; and install- ing temporary seals into mine openings following completion of risk assessments and using remote-control equipment to pump a fire-resistant expandable materi- al called Rocsil. The plan also includes additional drilling and sealing of the old longwall panel to ensure the area is fur- ther isolated. The company will work with air-quality monitoring experts on a volun- tary program of environmental monitoring at North Goonyella, including regular site visits and boundary inspections to assess and analyze air-quality data from key points. The company will also make sure all safety protocols are in place and strict risk assessments are performed. "Working in consultation with the in- spectorate and third-party experts, we're moving safely and as quickly as possible to address the situation," said President of Peabody Australia George J. Schuller Jr. "Peabody appreciates the ongoing work of the team at North Goonyella, the inspec- torate, independent technical experts, Queensland Mines Rescue Service, union representatives and all of the people who are engaged in the response to this issue." The company noted that the fire is ongoing, and it is too early to assess the extent of impacts. Peabody does not expect any produc- tion from North Goonyella in the fourth quarter of 2018 and has a small amount of coal in inventory to ship. The company said it is too early to assess the full finan- cial impact to future periods as a result of the ongoing issue, however, with strong performance from other mines, the com- pany is maintaining its full-year 2018 metallurgical coal sales volume targets of 11 million to 12 million tons. The mine shipped 1.6 million tons in 2016 and 2.9 million tons in 2017. North Goonyella ships a high-quality hard-coking coal that typically realizes at or near the premium hard-coking coal benchmark. Prior to the Goonyella North fire, Pea- body Energy signed a definitive agreement to purchase the Shoal Creek metallurgical coal mine from Drummond Co. Inc. for $400 million. Shoal Creek is in central Alabama and serves Asian and European steel mills with high-vol A coking coal. The transaction involves the purchase of the mine, prep plant and supporting assets, and excludes legacy liabilities other than reclamation. The purchase price is subject to customary working capital adjustments. Closing is expected prior to the end of 2018. Opened in 1994, Shoal Creek employs 400 and uses longwall mining technolo- gy to mine both the Blue Creek and Mary Lee coal seams. The current mine plan accesses 17 million tons of reserves. In 2017, the mine sold 2.1 million tons. South32 Acquires 50% of Eagle Downs South32 Ltd. has completed the acquisi- tion of a 50% interest in the Eagle Downs metallurgical coal project in Queensland's Bowen Basin. South32 also assumes op- eratorship with the other 50% interest in the project held by Aquila Resources Pty Ltd. (Aquila), a subsidiary of BaoWu. Eagle Downs is a large, high-quality and fully per- mitted metallurgical coal development proj- ect located approximately 25 kilometers (km) southeast of the town of Moranbah. The consideration comprises an upfront payment of approximately $106 million, a deferred payment of $27 million due three years after completion and a coal price linked production royalty that will also be payable and is capped at $80 million. South32 CEO Graham Kerr said, "The acquisition of Eagle Downs embeds an- other attractive development option with- in our growing portfolio, with the upfront payment representing a minor premium to the historical infrastructure spend re- flecting our move to operating control." "We are pleased to be able to further strengthen our long-standing relationship with BaoWu and look forward to working with Aquila to commence the final feasi- bility study to optimize the mine design and development." Subject to the findings of the feasibili- ty study, South32 and Aquila plan to con- struct a multiseam underground longwall metallurgical coal mine and processing plant with a dedicated rail spur and train loadout facility. Eagle Downs was placed under care and maintenance in late 2015 having benefitted from initial investment that delivered site infrastructure, including water supply and high-voltage systems, office buildings and water and sediment dams. A set of dual 2-km drifts are also approximately 40% complete. Coronado Launches Large Coal IPO U.S.-based Coronado Global Resources launched what is set to be Australia's big- gest coal mining float in six years with an initial public offering (IPO) that seeks to raise $946 million and capitalize on Asian demand for metallurgical grade coal, ac- cording to Reuters. Coronado, which is backed by U.S. private equity firm Energy and Minerals Group (EMG), filed a pro- spectus for the IPO that will be priced at between A$4 and A$4.80 per share. The IPO will give the company an enter- prise value of up to A$4.4 billion, making it the biggest coal mining float in Australia since Yancoal Australia listed in 2012 at the peak of the country's mining boom. "Demand from Asia for met coal, partic- ularly from emerging economies, is expect- ed to be strong and Coronado will be a key supplier to this growth market," Coronado Chairman Greg Martin said. Coronado mainly produces 8.2 million metric tons per year (mt/y) of met coal from three U.S. mines and 8.5 million mt/y met coal from the Curragh mine in Australia, which it bought from Wesfarmers Ltd. in December for A$700 million. That makes it one of the biggest met coal producers. It also produces 3.5 million mt/y of thermal coal at Curragh, which it sells to the Queensland state government's power producer Stanwell Corp. The IPO opened on October 2 with shares set to be priced around October 19. Trading is expected to start on Octo- ber 23, according to the company.

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