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China First Project Gives Vital Boost to Waning Coal Mining Boom

The investor and employment outlook in Australias mining marketplace has been especially depressing with Australia coming off of its largest mining boom...

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|Apr 28|magazine13 min read

The investor and employment outlook in Australia’s mining marketplace has been especially depressing with Australia coming off of its largest mining boom dating back to the gold rush that exploded in the 1850s. Because of this, any degree of stimulus or investment in the mining industry is now exponentially more positive. Among the more significant turning points in recent Australian mining news comes from Waratah Coal’s China First project. China’s continuously high population growth and the seemingly ever-increasing demand for coal to support that growth make Australia’s abundance of raw materials, such as coal, a promised land for investment.

An agreement achieved between Clive Palmer (Australian businessman, politician, political activist, and owner of Mineralogy, Waratah Coal, Resourcehouse, Queensland Nickel at Townsville, and more) and Chinese utility China Power International Development is comprised of the building of a coalmine as well as an infrastructure project located near Alpha in the central west region of Queensland.

Massive Coal Export

This agreement marks the go-ahead for a $6.4 billion coal-mining project. From this $6.4 billion, the Chinese utility China Power International Development is expected to be supplied with 30 to 40 million tonnes of thermal coal each year, spanning a 20-year period. Palmer’s privately owned entity which put this massive project in play, Resourcehouse, will be exporting its coal from the Galilee Basin located in Queensland. The China First mining project will incorporate a combination of both open cut and underground mining operations. 

“The Export-Import Bank of China will provide a chunk of financing, and Resourcehouse has awarded an $8 billion engineering and construction contract to Metallurgical Corporation of China. The latter company will purchase a 10 percent stake in the China First project, and a $200 million minority stake in Resourcehouse. Those with direct access to foreign equity markets will note that Resourcehouse also plans to raise up to $3 billion in a Hong Kong IPO,” reported investment strategist and writer Christopher Barker.

It comes as no surprise then that the Queensland government has declared that the China First mine is a “Significant Project.”

Infrastructure Support for Massive Coal Mining

The massive volume of coal mined through this project necessitates new infrastructure developments. As such, the mining area located in Queensland’s Galilee Basin will receive the vital infrastructural implant of upwards of 450km of brand new standard gauge railway line, which will be aptly constructed with heavy haul capabilities to handle the 600 to 800 million tonnes of coal over the lifetime of this China First project. This span of new rail will link the coalmine to the Abbot Point coal terminal near Bowen.

Environmental Impact of Coal Production

Due to fast tracking of this project, the China First mine has enjoyed an above average regulatory approval period. This has allowed for the possibility of construction to start this year with the potential for coal production to also start in 2013. Approval was granted for the China First mine by the coordinator-general of Queensland based on the evaluation of Waratah Coal’s environmental impact statement (EIS). An EIS was required for approval of the China First mine because development and production can “significantly affect the quality of the human environment.” Waratah Coal’s EIS diagramed the positive and negative environmental effects of their proposed project.

Approval of this project is contingent upon stringent development and operating conditions. For example, operations must adhere to strict management of potential surface and groundwater impacts, rail line flooding, and even social impacts as well. The report stated: “The proposed mitigation and management measures including a commitment to rehabilitate to pre-existing conditions as far as practicable, are appropriate to manage impacts and [make sure] that the long-term viability of species or their geographical distributional range is not threatened.”

Waratah Coal’s Managing Director Nui Harris spoke of the great importance of achieving state approval for the China First project, and went on to say, “A Commonwealth EIS will now be lodged with the Commonwealth Department of Sustainability, Environment, Water, Population and Communities for review. Subject to the Commonwealth review, it is anticipated a final EIS will be lodged with the Commonwealth for approval in late October.”

Furthermore, earlier this year, the China First project had its Major Project Facilitation (MPF) status renewed by the federal government. This new renewal period extends through to December 31, 2016.

The Future of China’s Investment in Australia’s Coal

Due to local and international pressure and growing awareness, the overall environmental impact of all facets that revolve around coal mining and coal usage is increasingly among the most significant factors influencing the future of China’s investment in Australia’s coal mining operations.

“China’s State Council is eager to reduce the country’s dependency on coal as an energy source – which currently provides more than three-quarters of its energy demand. Officials are pushing for more nuclear, natural gas and renewable energy, Reuters reports. China will aim to derive 13 percent of its energy from non-fossil fuel sources by 2017,” reported Ana Komnenic of Mining.com.

Coal Production Produces Jobs

For now, the labor force of the mining industry will enjoy a huge boost provided by the China First mining project, which is projected to create approximately 3,500 construction jobs and more than 2,300 operational jobs.