Rio Tinto Moves on $750 Million Queensland Coal Mine

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Researched by Industrial Info Resources (Sugar Land, Texas). Work is due to start in February on the new Rio Tinto (NYSE:RTP) (London, United Kingdom) Coal Australia (RTCA) thermal coal mine at Clermont in central Queensland, Australia. The mine will be one of the largest in the state with an optimum output of 12.2 million tons per annum (tpa), of which the majority of the high quality thermal coal will be exported to Japan by 2013. The start of civil work and construction on the mine is subject to final government approvals and the first export of coal shipment is scheduled for the second quarter of 2010.

The $750 million mine will be an open cut truck/shovel operation with an inpit crushing and conveying system. Coal from the Clermont mine will be transported via a 13.3-kilometer conveyor to the existing product stockyards, stacker/reclaimers and train loadout facilities at Blair Athol mine. The coal will then be railed 278 kilometers to the Dalrymple Bay coal terminal. Approximately 400 jobs will be created during construction and 380 permanent jobs during its operating life of seventeen years based on proven reserves of about 190 million tons. It is estimated that the project will support about 3,800 associated jobs throughout Queensland.

Douglas Ritchie, RTCA managing director, said that all aspects of the Clermont mine operation have been designed to maximize energy efficiency. For example, Ritchie said, the input crusher and conveyor system will halve the haul truck requirement and the mobile fleet will use fuel efficient engines.

The Clermont mine site is about 15 kilometers southeast of the existing Blair Athol mine and will ramp up production as the older mine draws operations to a close in 2012. Ritchie said that the company would work with the local community to ensure the Blair Athol closure process was well managed and the site effectively rehabilitated.

The cost of the Clermont project has more than doubled from a 2002 estimate of $345 million. The main increase comes from RTCA’s decision to capitalize earth stripping rather than assess it as a production expense. High labor and materials costs driven by the global resources boom also contributed to cost increases.

RTCA’s current joint venture partners in the open cut mine are Mitsubishi Development (NYSE:MHVYF) (34.9%) (Tokyo, Japan) and J - Power Australia (15%). Mitsubishi’s stake will be reduced to 31.4% when JCD Australia takes a stake of 3.5% in the venture later this month.

RTCA also manages the Hall Creek, Tarong and Kestrel mines in Queensland, in addition to Blair Athol and the new Clermont project.

Black coal remains Australia’s largest commodity export at around $19 billion in 2005/2006, which showed a year-on-year increase of 43%. The country continued as the world’s largest coal exporter with 233 million tons in the period representing 30% of the global total. Japan (45%) and other Asian economies account for over 80% of Australian coal exports. Coal is expected to represent an ongoing 19% of the country’s total exports.

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