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Coal & Allied to spend big to double output

DESPITE reporting poor results in 2007, Coal & Allied said on Friday it has the potential to more...

Christine Feary
Coal & Allied to spend big to double output

Chairman Chris Renwick said 2007, which saw a drop in thermal coal production from all its projects, was a "disappointing and challenging" year for Coal & Allied.

He said it was disappointing because, despite strong markets for thermal and coking coal, Coal & Allied was "not able to take advantage of this due to infrastructure constraints", and challenging because of severe weather in the Hunter Valley in June, increasing demurrage costs stemming from ship queues in Newcastle and the strength of the Australian dollar all impacting on coal production.

In order to achieve the doubling of production by 2015, Renwick said Coal & Allied would invest around $5 billion in new projects, including continued work on the Mt Pleasant project and Lower Hunter Lands development proposal.

Coal & Allied spent the past year reviewing the engineering feasibility of its Mt Pleasant project, which has so far indicated the project is "economically attractive".

It is also seeking approval for a 21-year licence for its Hunter Valley Operations South, which would allow it to extract a further 84 million tonnes of coal and upgrade a range of associated infrastructure at the mine.

While infrastructure is "still the single most dominant issue facing Coal & Allied", Renwick said there are new signs of optimism.

He said the establishment of national body Infrastructure Australia was a step in the right direction, and that a long-term commercial framework was necessary to underpin investment in infrastructure and provide certainty to all participants.

Coal & Allied is working with the New South Wales Government to devise solutions, making a submission to former premier and facilitator for Hunter Valley coal chain infrastructure issues Nick Greiner.

The submission offered support for a long-term framework that would:

  • Provide certainty to producers over capacity allocations;
  • Give certainty to infrastructure providers over demand for infrastructure capacity; and
  • Ensure that infrastructure capacity allocations are in line with what the coal chain can deliver.

“Coal & Allied aspires to be in a very different place by 2015," Renwick said.

“Our plans for the future will increase the level of investment in the region, increase our return to shareholders and create thousands more jobs."

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