Small coal miners work cheap and fast
SMALL coal miners can deliver projects cheaper and quicker than the established heavy hitters, Stanmore Coal boss Nick Jorss has told the Australian Investors Association.
With the recent industry restructuring across Queensland mines and the culling of thousands of contractors and staff, Mr Jorss said the hardline focus on cost rationalisation would continue.
"Recent write-downs demonstrate (the) majors have a tendency to overpay," Mr Jorss said."Majors have clearly signalled a lesser focus on volume and greater focus on cost (and) construction and contracting costs are coming down."
Stanmore is moving forward to first coal in 2017 from its two priority projects, the Range thermal open-cut mine in the Surat Basin and the $900 million Belview coking coal underground mine east of Blackwater.
Junior coal companies had taken a pounding on the stock exchange in the past year, Mr Jorss said, but the long term dynamics of the industry were positive for coking and high quality thermal coal.
"Seven of the 10 most recent Queensland coal mines were developed by juniors," he said.
"The Australian junior coal sector is oversold and currently under-supported, but long term fundamentals for coal remain strong."
Thermal coal is forecast to lift its market share as an energy supply source from 27% to 30% in the next 25 years, with the Wood Mackenzie Coal Market Service predicting a 235% local production increase to meet Asian demand.
Recent Japanese talks point to about $165 a tonne for benchmark Australian prime hard coking coal.
Mr Jorss said the supply of coking coal was constrained with open cut operations now reaching uneconomic depths.