The ambitious plans of Lynch’s Waratah Coal in Queensland’s Galilee Basin have captured the attention of the State Government, supply chain-constrained miners and investors.

This week the Bligh Government announced it had recognised Waratah’s Galilee project, which includes a new 25 million tonne a year coal mine, a 500km rail and a new port, all worth $A5.3 billion, as a “significant project” for the state.

Lynch told International Longwall News the announcement of the project last week had generated a lot of interest across the board.

“There is a lot of interest from other mining companies obviously with the provision of additional capacity to the Bowen Basin,” Lynch said.

“There has been more than strong interest from people who want to get on board the line.”

Lynch said projects waiting in line to get capacity at ports would find the new proposed infrastructure attractive as they would be able to come online without waiting for spaces to free-up an already constrained infrastructure chain.

The port, which would be situated at Shoalwater Bay, could be economically attractive to Galilee and Bowen Basin miners for its proximity compared to existing ports.

The central part of the Bowen Basin is at the tail end of the Blackwater Goonyella coal chain but with Waratah's planned new line it would be 200km from a new port compared to the current 300-400km.

“Additionally the miners could get capacity on the new port at an earlier date than what they were looking at with an existing port,” Lynch said.

The projected export capacity is 50 million tonnes a year with the first coal shipment expected in 2012.

Waratah has taken up ground on either side of the rail route under a company called Fairway Coal.

Lynch said he has been “strongly encouraged” by the Government and described the project as the “missing piece of the puzzle” for the Bowen Basin.

“It provides a brand new corridor through the middle of the Bowen Basin that allows tonnage to reshuffle to a more sensible location as opposed to travel all the way up to Abbot Point,” he said.

“Along with this project you get the opening up of a brand new coal basin, providing some relief in a really difficult part of the Bowen Basin.

“The Government has been quite supportive through their facilitation process. Obviously we still have to go through normal environmental impact studies and engineering investigations.

“The economic benefits for the Queensland economy and the consolidated revenue with all the additional royalties are quiet dramatic.”

The port will be a pre-dry bulk coal export facility with two berths.

Waratah has spent $A2.5 million on port and rail scoping studies. Shoalwater Bay has been selected as an ideal location with its natural water depth of 20m, 1.5km from the shore.

Lynch said Shoalwater was a unique feature on the Queensland coast as

Dalrymple Bay had a 4.2km jetty with a 14km dredged departure channel.

“Our port will be able to accommodate the brand-new class of ultra-large bulk carriers the Chinamax, with little to no dredging, which makes it environmentally attractive,” he said.

Lynch said they had snuggled the rail access corridor just inside the Federal Defence Department land along its Shoalwater Bay southern border and the port.

Waratah will need to ensure the rail corridor does not impinge on the defence usage of the Shoalwater Bay area.

At this stage Waratah was looking at how much interest there would be from third-party users and what type of capacity they would need.

The initial project would have a 50Mtpa port with 25Mtpa of capacity available for sale to third-party users in the Bowen Basin and 25Mtpa of capacity to Waratah’s Galilee Basin project.

Lynch was confident the company would fill the capacity.

“We are confident in the attributes of the port are attractive and the construction time line,” he said.

The mines planned for the Galilee project would initially be a 20-year opencut dragline operation and in the longer term a longwall mine off the highwall.

“Looking at a very large sized mine, with multi-opencut pits feeding a central plant,” Lynch said.

“It is very simple geology, very flat lying seams, so that should equate to high productivity opencut and eventually longwall mining.”

Waratah now plans to undertake drilling to move from inferred resources to measured and indicated, allowing the project to become bankable.

“Ultimately by the end of this calendar year we will be between 6-9 billion tonnes (of inferred coal)," Lynch said.

Modest Lynch said he wasn’t really looking to beat the other miners in terms of size but was trying to build a mine that makes the most economic sense for the project.

However, at the predicted tonnage, the mine would be one of Australia's biggest coal mines.

Waratah said it had been approached by big potential partners in the project including off-take partners, trading houses, infrastructure players.

“As long as the economic potential of the project can be proven by the studies there are plenty of investors that we have met that are interested in the project,” Lynch said.

Waratah has started its pre-feasibility study and is about to start the mining, washing and infrastructure studies.

Over the next 12-18 months Waratah will spend $30-40 million on engineering and infrastructure studies and drilling.