August 11, 2016 Read More →

A Money-Losing Venture Down Under

Peter Hannam for the Sydney Morning Herald:

A new coal mine planned for the NSW Southern Highlands would lose money on every tonne produced and clock up a net cost to the owner of more than half a billion dollars, two new reports say.

Hume Coal, owned by Korean steel giant POSCO, wants to develop an underground mine near Berrima, about 130km south-west of Sydney.

One third of Queensland’s coal mines are running at a loss and in urgent need of state government assistance, according to the Queensland Resources Council.

At its peak, the mine would produce about 3 million tonnes a year, with about 80 per cent of it the higher-valued coking coal used in steel making. Since the coal seam sits below an aquifer the operation will need to use techniques not used previously in Australia, and extract only about one-third of the available resource.

Tim Buckley, an analyst with the Institute for Energy Economics and Financial Analysis, estimated total costs will reach $130 per tonne of coal over the proposed 19-year life of the mine, well above the $112 a tonne POSCO is likely to sell it for.

Full article: POSCO to lose money on Hume Coal, should snap up cheap assets instead: reports

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