Nestled in the Hunter Valley region of New South Wales, Newpac is home to the largest remaining semi-soft coking coal reserve in the region and also hosts high-grade export thermal coal and domestic thermal coal, says Jury. He has an intimate knowledge of the Hunter Valley mine due to his role as managing director of the previous mine owner, Nardell Coal – which collapsed in February 2003 only to be revived later that year as Resource Pacific, after management bought the mine for a modest $5.7 million.
Previously a lone bord and pillar mine, Newpac began longwall mining alongside the B&P operation in January and is so far on track to mine 1.7 million tonnes in 2007, and plans to increase this to 3.7Mt in 2008 and 4.1Mt in 2009.
At the end of March, the longwall had extracted 449,000 run-of-mine tonnes of coal since first coal in mid-January.
Jury told AL there had been some minor electrical and mechanical issues with the equipment since ramp-up, which had so far prevented the longwall operation from settling into a regular daily/weekly production cycle.
“Most of the current issues relate to teething problems, mainly with our boot end. Once we have completed our first longwall block and relocated the longwall to LW2 [early September] the mine will be in a good position to see the wall operate unhindered,” he said.
The longwall face is 250m wide and designed to operate at 3000t per hour.
“Given that it has already demonstrated its capability well within its design capacity, we are confident that the mine will deliver the expected budgeted production result without too much difficulty,” Jury said.
The $68.8 million longwall equipment contract was awarded to DBT, while an upgraded 3500tph coal clearance system was installed by Nepean Conveyors for a price of $18.1 million.
The major longwall components comprise 145 roof supports, an Electra 2000 Series Shearer, a DBT PF5 Pan Line, a bridge stage loader equipped with dust removal filters, two pump stations and a 5.5mVA transformer.
Development rates at the mine have been reasonable, using Joy 12CM11 continuous miners, but a new development fleet is set to speed up the process over coming months.
The first two of eight new 10SC32BCs shuttle cars have already arrived onsite, with a further four Joy 12CM12s continuous miners due to arrive from June to August.
“The new miners will certainly provide a much welcome boost to our development capacity … the generational change that is provided with the new equipment should increase our development rates twofold,” Jury said.
Longwall mining began in the southern block in Pikes Gully seam (from 2007 to 2014), and will progress into the underlying Liddell seams (2008-2018) and the Lemington seam (2019-2024).
The southern block at Newpac has resources and reserves of 220Mt, compared with the 34Mt in the northwest block, where the B&P mine is currently on hold.
The long-term viability of the mine was further boosted this year through a $A30 million joint venture deal with South Korean steelmaker POSCO, which gave the company a 10% stake in the mine and locked them in to buy 400,000t of Newpac coal from April 1, 2007, and 500,000tpa thereafter as long as the JV exists.
“They are one of the biggest steel producers in the world and are a premium customer to have as a business partner,” Jury said.
“The long-term sales commitment that they bring to the mine will help to support long-term revenue generation and in any bulk commodity this is a significant factor in ensuring long-term viability.
It also signifies to other similar customers their confidence not only in the product but also in the mine.”
Similar to what most companies have reported of late, Resource Pacific’s biggest obstacles have been the supply of labour and materials under construction contracts – where pressure from a booming commodity cycle has meant resources are in tight supply.
Luckily, the company has avoided the same fate of other Hunter Valley operations like Austar and Coal & Allied, which were forced to cut production and jobs due to rising demurrage costs and reduced port and rail allocations at Newcastle Port.
“Although we have been impacted, the benefit of having secured a reasonable allocation prior to the Capacity Balancing System being reintroduced has meant that we were able to shuffle our shipments in line with the cutbacks,” Jury said.
“In line with all other producers, we are paying high demurrage costs and look forward to a respectable balancing of vessels in the next few months, sufficient to bring these costs back down to more reasonable levels.”
Jury said although cost pressures would continue to affect all companies in the current industry climate, he is confident in Newpac’s products, which are in high demand with customers – particularly in the Asian markets of Japan, South Korea and Taiwan.
“Our mining conditions are also favourable so we do expect that once operations with the longwall are settled down, our costs should be reasonable, if not competitive to others.”
Looking forward, future acquisitions are on the cards for Resource Pacific – partly because the risks associated with having a single operating mine are particularly close to home for Jury, who witnessed Nardell’s downfall firsthand.
“We are very conscious of the ‘single mine’ risk and it is a strategic objective of the company to expand its operations into a multi-mine environment … we are seeking out opportunities that we believe we can add value to,” Jury said.
