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03-09-2014, 11:12 PM
Dump site test of coal viability
1479 words
4 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Matthew Stevens
Adani Group and North Queensland Bulk Ports Corporation plan to dump their 3 million tonnes of dredged spoil on the site of an Abbot Point coal terminal planned and, relatively recently abandoned, by BHP Billiton.
Which means only that BHP's retreat from coal's rapidly withered economics has created space enough, quite literally, for Adani and the port owner to defuse a damaging contest over plans to dump the Abbot Point spoil within the bounds of the Great Barrier Reef National Park.
While this new option remains discretely contentious for at least one serious infrastructure provider in the Queensland coal chain, it is understood that state and federal government authorities will be asked within weeks by NQBP to approve the new plan for onshore dumping.
The so-called T2 site was supposed to support BHP's ambitions to run its own integrated export chain in Queensland. But in August 2012 BHP, walked away as its capital constraints collided with falling coal prices.
In October last year, NQBP confirmed BHP had surrendered its rights to the site.
Discussions over the potential of the T2 site to contain the dredge spoils are said to have started earlier this year, but they have been kept confidential, in part, because of continuing legal challenge to an offshore dump site selected by NQBP and subsequently approved by government on the back of endorsement by the Great Barrier Reef Marine Park Authority.
The proposed offshore dump zone was a four-square kilometre site that hosts no coral or seagrass beds or sensitive habitats. It is estimated to be 40 kilometres from the nearest coral and the material would have been dumped only under the direction of the GBRMPA and on days when wind and tides would prevent it from drifting towards the reef.
But the plan triggered outcry, some based in fact, most of it the product of ill-informed passion and hysteria. Global icon
A community of scientists objected with considered rationality to a proposal widely mis-characterised by anti-coal activists as a proposal to dig up the reef in the name of coal and then to dump toxic waste on our endangered global icon.
Ultimately, the NQBP's shift to active consideration of onshore dumping is being, quite fairly, celebrated as a meaningful victory by an anti-coal lobby that has made all too much of the risks to the Great Barrier Reef of the plans to put back into the ocean the sand and soil extracted in expanding Abbot Point's shipping channel.
While the proponents will argue that a viable onshore option was not available to them until BHP's withdrawal was confirmed, the fact is that it would not have been considered without the often ill-informed furore.
But celebrations by the anti-coal crowd might well be cut short and victory rendered pyrrhic if government agencies endorse the plan to re-secure the long-constructed approval platform for Adani's Carmichael coal project.
The mere fact that confirmation of the changed approach from the expansion proponents leaked first from the federal environment minister's office suggests this is a wholly endorsable option.
Most certainly the move will clarify the community debate about Abbot Point and the risk its dredging poses to the reef. As we have reported over the past year and more, the fear campaign over reef risk has reached from the courtroom to a UN global heritage forum to the ice cream counter. And, along the way, the waste disposal plan has morphed into a litmus test of Australia's continued welcome of the coal industry.Australia's biggest
Adani's mine would be Australia's biggest and so would its expanded coal terminal at Abbot Point. The mine is slated to eventually produce 60 million tonnes of quality thermal coal and the shipping terminal to support exports of up to 70mtpa.
As things stand, Adani is the operator of what is currently the only operating terminal at Abbot Point. The capacity of T1 is 50mtpa to which Adani wants to add 20mtpa through the construction of two new wharves.
At the same time, another Indian industrial conglomerate, GVK, is leading plans to ship an additional 60mtpa through a new terminal at Abbot Point.
To make that and a whole lot more work, NQBP has applied to add capacity to the shipping channel and that will require no more than two weeks of dredging and that will produce a comparatively spare amount of waste. Just on that point, there is a good chance that NQBP will not even hit the approval ceiling of 3mt of spoil. Some of that material was to be generated by preparatory work for T2. Given it is not going to happen, then it would seem likely that neither will the dredging it required.
Now, the way we hear it, Aurizon might not have been particularly thrilled at first hearing of plans to use the T2 site as a dump. The theory there is that BHP's exit was seen as a strategic opportunity by Aurizon, which has ambitions to get into the export terminals business. But the latest from Aurizon is that it would have no concerns over the reallocation of land use. Once again, this view is said to have been fully informed by the current outlook for coal demand.
Any move to contain the dredging spoil on the proposed T2 site would effectively sterilise the area from further development for up to a decade. And that pretty much fits like a glove with the changed outlook for growth in the state's coal output.No need
The halt to Queensland coal expansions, once planned by Xstrata, BHP, Rio and Anglo, suggests pretty plainly there will be no need this decade for additional port capacity beyond the current plans for T1 and T3. The other thing there is that Aurizon has other terminal options on its plate.
GVK's joint venture partner is Gina Rinehart's Hancock Prospecting and their project is currently the subject of negotiations with Queensland's dominant freight rail operator.
Aurizon would like to buy 51 per cent of the infrastructure business that would build and operate the rail and port, which would link the joint venture's mines to our region of coal customers. The GVK-Hancock project is said to be some distance further down the approval process than the Adani project, which is just one of the reasons why Aurizon is said to like the cut of the GVK jib. The other reasons for preference include a belief the three GVK deposits are better quality and shallower than Adani's Carmichael deposit and that GVK seems far more open to development options that better leverage Aurizon's existing rail network.
Like Adani, GVK arrived wanting to build a whole new dedicated network. But while Adani continues to work on a plan to build nearly 600 kilometres of wide gauge rail, GVK seems to have accepted Aurizon's idea, which is to drive a narrow gauge spur from the Galilee Basin to the existing Queensland coal network. Aurizon's view is that this cuts at least $1 billion from the capital cost and brings forward cash flows because it will take far less time to complete the link between mine and port.
While coal might not be the tipple of the day for BHP, no one should imagine the Global Australian is anything but super keen on the potential of fossil fuels as an earner.
Oil is the name of the fossils game at BHP and it is continuing to spend big time on the commodity that most separates it from its mining peer group. Speaking in New York overnight Monday, BHP's petroleum boss Tim Cutt took time out to "reaffirm a few points" about current strategy. BHP will continue to spend about $US4 billion ($4.3 billion) a year on a US shale business whose focus is oil and which will make a profit for the first time this year.
Better still, Cutt said we should expect the onshore business to start throwing off positive cash flow from FY16 and to be generating $US3 billion annually of free cash flow by the end of the decade. Petroleum also appears to be the one arm of BHP that appears to have any sort of freedom when it comes to exploration.
As long as it is oil, mind you.
So, while Cutt signalled that the Scarborough gas project in offshore WA might struggle to make an investment case, he offered a glimpse of how "extremely excited" BHP is about its new oil territory in waters off Trinidad and Tobago. "We have world class source rock and we know it," he said in flagging the biggest seismic effort ever by a non-major.
Fairfax Media Management Pty Limited
Document AFNR000020140903ea940002g
1479 words
4 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Matthew Stevens
Adani Group and North Queensland Bulk Ports Corporation plan to dump their 3 million tonnes of dredged spoil on the site of an Abbot Point coal terminal planned and, relatively recently abandoned, by BHP Billiton.
Which means only that BHP's retreat from coal's rapidly withered economics has created space enough, quite literally, for Adani and the port owner to defuse a damaging contest over plans to dump the Abbot Point spoil within the bounds of the Great Barrier Reef National Park.
While this new option remains discretely contentious for at least one serious infrastructure provider in the Queensland coal chain, it is understood that state and federal government authorities will be asked within weeks by NQBP to approve the new plan for onshore dumping.
The so-called T2 site was supposed to support BHP's ambitions to run its own integrated export chain in Queensland. But in August 2012 BHP, walked away as its capital constraints collided with falling coal prices.
In October last year, NQBP confirmed BHP had surrendered its rights to the site.
Discussions over the potential of the T2 site to contain the dredge spoils are said to have started earlier this year, but they have been kept confidential, in part, because of continuing legal challenge to an offshore dump site selected by NQBP and subsequently approved by government on the back of endorsement by the Great Barrier Reef Marine Park Authority.
The proposed offshore dump zone was a four-square kilometre site that hosts no coral or seagrass beds or sensitive habitats. It is estimated to be 40 kilometres from the nearest coral and the material would have been dumped only under the direction of the GBRMPA and on days when wind and tides would prevent it from drifting towards the reef.
But the plan triggered outcry, some based in fact, most of it the product of ill-informed passion and hysteria. Global icon
A community of scientists objected with considered rationality to a proposal widely mis-characterised by anti-coal activists as a proposal to dig up the reef in the name of coal and then to dump toxic waste on our endangered global icon.
Ultimately, the NQBP's shift to active consideration of onshore dumping is being, quite fairly, celebrated as a meaningful victory by an anti-coal lobby that has made all too much of the risks to the Great Barrier Reef of the plans to put back into the ocean the sand and soil extracted in expanding Abbot Point's shipping channel.
While the proponents will argue that a viable onshore option was not available to them until BHP's withdrawal was confirmed, the fact is that it would not have been considered without the often ill-informed furore.
But celebrations by the anti-coal crowd might well be cut short and victory rendered pyrrhic if government agencies endorse the plan to re-secure the long-constructed approval platform for Adani's Carmichael coal project.
The mere fact that confirmation of the changed approach from the expansion proponents leaked first from the federal environment minister's office suggests this is a wholly endorsable option.
Most certainly the move will clarify the community debate about Abbot Point and the risk its dredging poses to the reef. As we have reported over the past year and more, the fear campaign over reef risk has reached from the courtroom to a UN global heritage forum to the ice cream counter. And, along the way, the waste disposal plan has morphed into a litmus test of Australia's continued welcome of the coal industry.Australia's biggest
Adani's mine would be Australia's biggest and so would its expanded coal terminal at Abbot Point. The mine is slated to eventually produce 60 million tonnes of quality thermal coal and the shipping terminal to support exports of up to 70mtpa.
As things stand, Adani is the operator of what is currently the only operating terminal at Abbot Point. The capacity of T1 is 50mtpa to which Adani wants to add 20mtpa through the construction of two new wharves.
At the same time, another Indian industrial conglomerate, GVK, is leading plans to ship an additional 60mtpa through a new terminal at Abbot Point.
To make that and a whole lot more work, NQBP has applied to add capacity to the shipping channel and that will require no more than two weeks of dredging and that will produce a comparatively spare amount of waste. Just on that point, there is a good chance that NQBP will not even hit the approval ceiling of 3mt of spoil. Some of that material was to be generated by preparatory work for T2. Given it is not going to happen, then it would seem likely that neither will the dredging it required.
Now, the way we hear it, Aurizon might not have been particularly thrilled at first hearing of plans to use the T2 site as a dump. The theory there is that BHP's exit was seen as a strategic opportunity by Aurizon, which has ambitions to get into the export terminals business. But the latest from Aurizon is that it would have no concerns over the reallocation of land use. Once again, this view is said to have been fully informed by the current outlook for coal demand.
Any move to contain the dredging spoil on the proposed T2 site would effectively sterilise the area from further development for up to a decade. And that pretty much fits like a glove with the changed outlook for growth in the state's coal output.No need
The halt to Queensland coal expansions, once planned by Xstrata, BHP, Rio and Anglo, suggests pretty plainly there will be no need this decade for additional port capacity beyond the current plans for T1 and T3. The other thing there is that Aurizon has other terminal options on its plate.
GVK's joint venture partner is Gina Rinehart's Hancock Prospecting and their project is currently the subject of negotiations with Queensland's dominant freight rail operator.
Aurizon would like to buy 51 per cent of the infrastructure business that would build and operate the rail and port, which would link the joint venture's mines to our region of coal customers. The GVK-Hancock project is said to be some distance further down the approval process than the Adani project, which is just one of the reasons why Aurizon is said to like the cut of the GVK jib. The other reasons for preference include a belief the three GVK deposits are better quality and shallower than Adani's Carmichael deposit and that GVK seems far more open to development options that better leverage Aurizon's existing rail network.
Like Adani, GVK arrived wanting to build a whole new dedicated network. But while Adani continues to work on a plan to build nearly 600 kilometres of wide gauge rail, GVK seems to have accepted Aurizon's idea, which is to drive a narrow gauge spur from the Galilee Basin to the existing Queensland coal network. Aurizon's view is that this cuts at least $1 billion from the capital cost and brings forward cash flows because it will take far less time to complete the link between mine and port.
While coal might not be the tipple of the day for BHP, no one should imagine the Global Australian is anything but super keen on the potential of fossil fuels as an earner.
Oil is the name of the fossils game at BHP and it is continuing to spend big time on the commodity that most separates it from its mining peer group. Speaking in New York overnight Monday, BHP's petroleum boss Tim Cutt took time out to "reaffirm a few points" about current strategy. BHP will continue to spend about $US4 billion ($4.3 billion) a year on a US shale business whose focus is oil and which will make a profit for the first time this year.
Better still, Cutt said we should expect the onshore business to start throwing off positive cash flow from FY16 and to be generating $US3 billion annually of free cash flow by the end of the decade. Petroleum also appears to be the one arm of BHP that appears to have any sort of freedom when it comes to exploration.
As long as it is oil, mind you.
So, while Cutt signalled that the Scarborough gas project in offshore WA might struggle to make an investment case, he offered a glimpse of how "extremely excited" BHP is about its new oil territory in waters off Trinidad and Tobago. "We have world class source rock and we know it," he said in flagging the biggest seismic effort ever by a non-major.
Fairfax Media Management Pty Limited
Document AFNR000020140903ea940002g