Economy ideal for Galilee Basin
THE mining firm behind the largest coal mine in Queensland's history says the economic climate is "ideal" for its $6.4-billion Galilee Basin project.
After four years of jumping through hoops to meet federal environmental approvals, the Alpha coal project - majority-owned by multi-national Indian firm GVK - was approved on Thursday (aug23).
Environment Minister Tony Burke announced the huge Alpha coal project had been given the green light, albeit with strict environmental conditions.
GVK group managing director of coal and infrastructure Paul Mulder said the Alpha project remained viable, citing low capital costs, strong global investor support, robust, low operating costs and favourable geology.
Mr Mulder said the company already was in advanced discussions with potential commercial banking investors in the mine, rail and port areas of the huge Central Queensland project, with capital expected to come on board as construction began in mid-2013.
GVK's vote of confidence came on the back of two days of mixed signals about the resources industry.
On Wednesday, BHP shelved its $60billion expansion of the South Australian Olympic Dam uranium project.
This move prompted Federal Resources Minister Martin Ferguson on Thursday to declare the end of the mining boom.
Prime Minister Julia Gillard and Finance Minister Penny Wong later attempted to clarify the statement, indicating it was as a sign of falling commodity prices rather than the end of the boom.
Opposition Leader Tony Abbott seized on the BHP announcement on Wednesday as proof the mining and carbon taxes were putting at risk future mining investment, a claim at odds with Mr Mulder's comments.
While market prices for coal and iron ore have come off unprecedented highs, Mr Mulder's comments revealed there was still confidence in the future of coal operations in Australia.
The recent falls in coal prices have contributed to the closure of BMA Coal's Norwich Park mine and job losses at Ensham mine, as well as Rio Tinto's return to plans to close Clermont's Blair Athol mine.
Data released in the Bureau of Resource and Energy Economics June quarter market update showed that despite the loss of value in coal and iron ore, forecasts remained positive.
The bureau forecast year-on-year increases for export earnings in 2012-13 in thermal coal and iron ore of 7% each, uranium of 9%, LNG of 29%, alumina of 30%, while metallurgical coal was expected to fall 2%.
That data was further backed by the Reserve Bank's August meeting minutes, revealing coal exports had declined in the June quarter "following industrial disputes and weather-related disruptions".
"Members were informed that additional large resource projects had commenced or received approval in recent months, thereby sustaining the very large stock of work in the pipeline," the minutes read.
"This had occurred despite some mining companies adopting a more cautious approach to potential, but yet to be approved, investment projects."
The data points to a changing dynamic in the resources industry, changes which have not escaped Queensland Resources Council chief executive Michael Roche.
He said a key message was that "no resources project is bullet-proof".
He said the days of the easy money on the back of high commodity prices were over, thereby pushing companies to grow production volumes, cut costs and boosting productivity.
"It's a tough market globally and will be right through 2012 but we're very confident about long-term growth prospects," he said.
Mr Roche said his optimism was buoyed by Mr Burke's approval for the Alpha coal project, but there remained "a lot of hard work ahead" to turn the project into a reality.
"We can, therefore, only hope that politicians refrain from dreaming up new ways to throw a spanner in the works of this exciting Galilee Basin coal project."