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Planning Assessment Commission – Regarding Warkworth Continuation Project

September 07, 2015

Planning Assessment Commission Submission from Tim Buckley, Director Energy Finance Studies at the Institute of Energy Economics and Financial Analysis (IEEFA)

Warkworth Continuation Project (SSD 6464/SSD 6465)
Monday 7 September 2015



Click photo for full document

Key points:

  1. Thermal coal prices are down more than 60% from the 2011 peak, and the forward market prices in a further decline in nominal prices till at least 2021.
  2. Thermal coal import demand has declined in both 2014 and to-date in 2015.
  3. IEEFA views seaborne thermal coal markets as in structural decline, meaning volumes and pricing will continue to decline over time.
  4. Using current coal prices, the Warkworth Continuation has a negative net value.
  5. Royalty payment estimates to the NSW government are likewise overstated.
  6. The likely employment value of this project is likely to be overstated given the massive cost reduction programs being implemented by Rio Tinto and its peers.
  7. Rio Tinto has proposed the Warkworth Continuation under the premise it would be the proponent, and hence would take ‘ownership’ of the rehabilitation program’s funding and implementation. Clearly the ‘dataroom’ open currently for the proposed sale of Rio Tinto’s NSW coal assets shows this is a false premise….

“In conclusion… the Planning Assessment Commission reject the Warkworth Continuation Project as too risky and where the costs outweigh the benefits.”

The full document can be found here 

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