It could be disastrous for other coal developments in the Surat Basin – being proposed by MetroCoal and Stanmore Coal –if Xstrata decides to shelve the Wandoan project, which was expected to contribute to the investment in infrastructure and services to the region.
Stanmore believes the economics of its The Range project in the Surat Basin remain highly attractive and the company expects to release the finalised feasibility study in 1Q2013.
“The board remains confident of the long-term fundamentals of global thermal and coking coal markets,” it said.
“We continue to progress our existing portfolio of projects and selectively adding to our asset base where acquisitions are considered value accretive to Stanmore Coal.
“The group will seek to introduce joint venture partners and off-take customers to our projects to assist with funding and development.”
The Wandoan coal project is looking more uncertain, with Glencore’s chief executive recently saying a merged Xstrata-Glencore will avoid greenfields projects.
Glencore chief executive Ivan Glasenberg told investors at an earnings presentation that the company would prefer brownfields projects because they were less risky.
Outgoing Xstrata global chief executive Mick Davis said in August the proposed 60 million tonne per annum Wandoan thermal coal mine remained ''a very, very important component of Xstrata's growth potential going forward, but it is not part of the current phase of expansion”
Wandoan, which would employ about 1400 people during the construction phase, would also be a significant employer of operational staff.
Stanmore remained upbeat despite the headwinds in the industry over the past six months.
For the half-year ended December 31, Stanmore reported a loss after income tax of $3.3 million, compared with a loss of $3.7 million for the previous corresponding period.
The public consultation process for The Range project's environmental impact statement was completed after December 31. The company expects environmental approval for the project to be granted in 2H2013.
The company completed the acquisition of EPC 1274 and 1276 in the Surat Basin during the six month period, through exchange of tenements which required no cash or equity consideration.
“The new tenements significantly increase the company's footprint and potential resource base in the Surat Basin, with EPC 1274 and 1276 covering a combined area of 1371km2,” it said.
“The company commenced a drilling program during the period to establish an inferred resource from within the original exploration target' of 130-195Mt.
“Stanmore has targeted two particularly prospective areas within the larger tenement area with a view to identifying shallow thermal coal suitable for open cut mining.”
