Australia’s Stanmore Coal expands on all fronts

Australian mining firm Stanmore Coal will expand its existing Queensland coal production capacity at the same time as it moves forward with its planned acquisition of Australian resources firm BHP's lower-grade coking coal assets.

Stanmore's board has approved an upgrade to its Isaac Plains coal handling and processing plant (CHPP) to increase its capacity by 20pc, allowing it to handle more than 4mn t/yr run of mine (ROM) coal. This will allow it to match higher ROM production as it ramps up production at its Isaac Downs extension.

The firm expects 2022 production from its existing operations to be aligned with the 2.52mn t/yr in July-December 2021 rather than the 1.61mn t/yr in January-June 2021, and for the upgraded CHPP to support increased production over the next two years.

Stanmore sold 632,000t of mostly metallurgical coal during October-December, down from 723,000t in July-September but up from 293,000t for April-June. The weak first-half 2021 contributed to full-year production of saleable coal of 2.07mn t, down from 2.26mn t in 2020 and below its 2.2mn-2.4mn t guidance for 2021.

Strong prices for metallurgical and thermal coal have prompted Stanmore to invest in ramping up Isaac Downs quickly, despite its planned $1.2bn acquisition of BHP's 80pc stake in the BHP Mitsui Coal coking and thermal coal joint venture. This deal is still on track complete in the middle of 2022 despite Stanmore's major shareholder, Indonesian-Singaporean firm DSS, postponing its extraordinary general meeting to seek approval for the plan indefinitely, according to Stanmore.

Premium hard coking coal prices more than trebled from early May to exceed $400/t fob Australia in the middle of September before easing until late November and rose again to new record highs in January. Argus last assessed premium hard low-volatile coking coal at $446.45/t fob Australia on 4 February, up from $381.65/t 12 January.

Thermal coal prices eased from record highs in the middle of October but picked up in the past month to new highs in late January. Argus last assessed high-grade 6,000 kcal/kg NAR thermal coal at $246.45/t fob Newcastle on 4 February, up from $192.60/t on 7 January but down from $260.82/t on 28 January.

The Isaac Downs extension primarily produces 9.1-9.5pc ash high-quality semi-soft coking coal with a secondary product of 16pc ash thermal coal. It contains some coal seams that can produce semi-hard coking coal at 8.5pc ash, which can be exploited in response to market conditions.

By Jo Clarke

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