China's biggest coke producer (Meijin) plans coal giant in Galilee Basin

2011/6/8 12:07:48
CHINA'S biggest private coke producer is planning a multi-billion-dollar thermal coalmine in Queensland's frontier Galilee Basin that would rival the giant mines planned there by Clive Palmer, Gina Rinehart, India's Adani and Brazilian giant Vale.

Meijin Energy, owned by Chinese billionaire Yao Junliang, has been quietly drilling coal tenements it acquired in 2007, 230km southwest of Charters Towers.

Last week, Meijin, operating here as Macmines AustAsia, outlined its first coal resource at what it is calling the China Stone project.

Studies show it has a resource of 3.7 billion tonnes of thermal coal.

A company official said Meijin had plans to add to the resource as it aimed to build a mining operation that would export between 30 million and 60 million tonnes a year of coal from 2014 or 2015.

That would dwarf Australia's biggest operating black coal mines, BHP Billiton's Blackwater and Goonyella, which produce about 14 million tonnes of coal a year each.

But it is the typical size of eight thermal coal mines now being planned in the Galilee, which remains undeveloped largely because it is further from export ports than Queensland's more-established Surat and Bowen basins.

The planned Galilee Basin operations -- none of which have been given formal approval -- have development price tags of $3 billion-plus even before taking into account the railways and port expansions that will be needed to handle an extraordinarily ambitious total of 200 million tonnes a year of coal.

To put that in perspective, Australia -- the world's second-biggest coal exporter -- now exports about 140 million tonnes of thermal coal.

Meijin's plans add to the mix of developing countries eager to gain a foothold in what could become the nation's next big coal region.

As well as Mrs Rinehart and Mr Palmer, Brazil, India and China have all grabbed footholds in the area.

Russia is the only missing member of the so-called BRIC (Brazil, Russia, India, China) nations, which are at the centre of this century's shift in economic power away from the developed nations.

Mrs Rinehart is reportedly negotiating to sell a majority stake in two mines, each said to be capable of producing 30 million tonnes of coal a year, to India's GVK.

Mr Palmer, whose $3.6bn Hong Kong float fell over at the weekend, has lined up Metallurgical Corporation of China and China Railway Group to help build a $US7.6bn mine, port and railway operation.

One of his Galilee Basin mines was included in the abortive float.

As well, India's Adani is planning to spend $10.9bn on its Carmichael project, while Vale is targeting a 30 million tonne-a-year operation.

The only listed Australian company in the mix is Bandanna Energy, which owns 50 per cent of the South Galilee project with US coal investor AMCI.

But Bandanna is auctioning itself, with Indian buyers reportedly the most interested.

The main problem for development of the sparsely populated Galilee Basin -- apart from finding cash -- is infrastructure.

There is no railway to take the coal to port and little other infrastructure normally associated with sizeable towns.

At the moment, the host of companies rushing to build mines in the area are planning three separate railways.

Meijin, which is based in China's coal-rich Shanxi province, has started talks with a construction firm about using one of the railways. It is also bidding for port capacity at the Abbot Point coal terminal near Bowen.

Vale Australia operations director Steve Badenhorst said the various parties in the region should not compete on infrastructure. "We are trying to find common ground on things like a rail corridor to the port so we don't have three corridors that go to Abbot Point," he said.

"We are trying to liaise with the other parties and get them to agree to develop a common corridor, but as the basin is so large there will be independent spurs that come from each mine."

Meijin's Mr Yao is China's 102nd richest person, with a family fortune worth $US1.3bn according to the Hurun Report's rich list.

Meijin, whose resource is compliant with the Australian Joint Ore Reserves Committee code, is planning to begin a 12 to 18-month feasibility study this year, and is aiming to start construction in 2013.

Because it purchased the ground from a prospector in 2007, Meijin already has Foreign Investment Review Board approval and would only need environmental approval to start mining.


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Macmines Austasia Pty Ltd was registered and established in Queensland, Australia in July 1999. Since its establishment, the company has been focusing on geological exploration and mining business in Queensland.
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