The conveyor structure and jetty of the Line 2 conveyor loadout facility will be dismantled as it cannot be repaired.

However, the two crushing units that were feeding Line 2 are still functional and can be used in alternative arrangements, while the Line 1 loadout facility has not been affected.

Both loadout facilities have a nominal capacity of 5.5 million tonnes per annum.

The damage to Line 2, triggered by continuous rainfall, was first announced back in October 8 while Line 1 resumed full production on October 14 following in-house and independent reviews and assessments.

“For the remainder of 2009, Straits Asia expects to be able to achieve its remaining delivery commitments through a combination of continuing to use Line 1 and by using other, smaller scale, temporary loading facilities,” the company said.

“For 2010, management will continue to review other methods for increasing deliveries to keep pace with production increases planned for the mine.

“Looking further ahead, the management and consultant team has already started work on the longer-term project to replace the loading capacity of Line 2.”

Straits Asia chief executive officer Richard Ong said the plan for the long term was a new loadout facility with capacity of at least 8.5Mtpa.

A dedicated project team has already been established to manage the development and early indications are that such a facility could be completed within 12 months of construction starting.

“Given the significant future potential to continue to increase production from the Jembayan mine, the project team will ensure that the design has the ability to be upgraded to cater for higher loading capacities in due course,” Ong said.

The Jembayan thermal coal mine produced 1.52 million tonnes for the June quarter, up 28% year-on-year, at cash costs of less than $40/t.

Straits had commissioned the Line 2 loadout facility by the end of June, which doubled the mine’s capacity to 11Mtpa.

Shares in its affiliated Australian Securities Exchange-listed company, Straits Resources, are up half a cent to $1.625 this morning.