Coal news and updates

Wiggins Island coal export terminal open for business

The Wiggins Island coal export terminal (WICET) is expected to make its first shipment of 73,000 tonnes of coal this week, putting the Queensland terminal open for business three years after construction started.

Export volumes from the terminal, which is owned by eight coal miners, are being closely watched to gauge whether the miners can meet their "take or pay" agreements as thermal coal prices remain near six-year lows.

Newcastle thermal coal export prices are trading at about $$US60 a  tonne, down from about $US84 a tonne in early 2014.

WICET had initially hoped to increase annual exports to about 60 million tonnes a year from 27 million tonnes. But smaller increases in exports are now expected.

One of the terminal's owners, Cockatoo Coal, was forced to undertake a $125 million equity raising in February after falling coal prices prevented it getting the necessary finance to expand its Baralaba coal mine.

Another of the terminal's owners, Bandanna Energy, went into administration in September. Meanwhile, multinational miner Glencore – which is expected to account for about one-third of WICET's exports – suspended production for several weeks late last year to avoid selling coal at a loss in an oversupplied market.

Marcus McAuliffe, WICET's chief operations officer, said the first 73,000-tonne loading of coal – which is for a single miner – was expected to be finished by the middle of the week, allowing the ship to depart, and that the terminal was holding talks with other miners for further shipments.

Mr McAuliffe declined to name which coal miner is supplying the ship. He also declined to specify how much coal WICET expected to export this year, but said the terminal planned to "ramp up" capacity to demonstrate its capability to export 27 million tonnes annually.

"Actual throughput will be determined by customer demand," he said.

'Too early to estimate' exports

Morgans analyst Roger Leaning said it was too early to estimate how much coal WICET would export this year, given the volatility in coal prices and uncertainty over new mine developments. But in the long term, WICET was likely to be "strategically of some value" to the coal industry as battles continue over the development of other export terminals such as Abbot Point, Mr Leaning said.

Greenpeace, which opposes the development of Abbot Point due to potential damage to the Great Barrier Reef, said the WICET terminal was unlikely to operate a full capacity for the forseeable future and could become a "stranded asset".

"With China nearly halving its coal imports this year, coal projects will not have long to live, and we definitely should not be building new coal ports along the Great Barrier Reef," a Greenpeace spokesperson said.

Greenpeace said the ship currently being loaded at WICET is named Toro Orient and is heading to Hong Kong.

HSBC climate change strategists released a report in April warning that fossil fuel companies, or some of their assets, may become "economically non-viable" in the future due to falling commodity and energy prices, higher costs of production, innovation in energy technologies and the falling costs of renewable energy sources.

Mr McAuliffe said WICET had installed the "latest technology" to protect the environment including dust extraction systems, water sprinklers, air monitoring systems and enclosed conveyor arrangements. "WICET is proud of the extent to which we're engineering protection of the environment," he said.

source: http://www.smh.com.au