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Forecast met coal demand prompts Wesfarmers optimism

WESFARMERS Resources sees a bright future for the Australian metallurgical coal industry and beli...

Lou Caruana
Forecast met coal demand prompts Wesfarmers optimism

In a presentation to investors, Wesfarmers Resources managing director Stewart Butel said strong growth in Australian metallurgical coal exports was forecast to rise more than 30% from current levels.

“Australia is well placed to supply growth in Asian metallurgical coal demand,” he said.

“The current oversupply scenario will revert, given projected demand growth, supporting investment in new capacity.”

It would lead to the expansion of existing low cost mines and new mine development, he said.

The growth in emerging economies will drive steel demand and metallurgical coal demand, with Chinese seaborne demand forecast to peak at 100 million tonnes in the mid 2020s and Indian seaborne demand forecast to grow to 70Mt per annum in the same period.

Butel said the company would evaluate acquisitions that offered economies of scale or downstream benefits.

“Counter-cyclical timing may present opportunities,” he said.

Wesfarmers also completed feasibility studies for next-stage expansion options for its Curragh mine, which is expandable to 10Mtpa of export capacity and Bengalla, which is expandable to 10.7Mtpa run of mine capacity.

Wesfarmers acquired MDL 162 from Peabody Energy Australia for $70 million, which will provide the opportunity to utilise existing Curragh infrastructure including its coal handling and preparation plant, rail loop and mining equipment.

“This extends the Curragh mine life and provides an option to further optimise mine operations,” Butel said.

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