Despite speculation that he would be sharing costs with the other major player in the Galilee Basin, Gina Rinehart’s Hancock Prospecting, Waratah would prefer to be self-reliant on its infrastructure and water needs, Palmer told ILN after an address to the Sydney Mining Club.
“They [Hancock] have got no money,” he said.
“To build the railway costs $2.5 billion and to date no one in the Galilee Basin has offered me $1.5 billion to share it. To be honest they don’t have the money. It’s just all talking.
“All the things people say that it is desirable to share infrastructure, but it is all predicated on the idea that everything starts at the same time, everyone ready at the same and everybody has the money at the same time, and that’s just not real.
“We are ready to go; we have got sales contracts to meet. We’re not going to wait. We’re looking at groundwater and there seems to be enough there.”
Waratah has already signed sales agreements to supply 20 million tonnes per annum of thermal coal to European group Vitoil and another 20Mtpa to China.
The company is close to securing 70% funding for the Galilee project through Chinese banks, Palmer said.
Waratah has awarded the engineering, procurement and construction contract to Metallurgical Corporation of China, which has been retained by Palmer’s Mineralogy group to develop its iron ore projects in Western Australia.
China Railway Engineering and Construction, which is developing the fastest train in the world between Beijing and Shanghai, will build the dedicated 500-kilometre railway to Abbot Point, while China Port and Communications will develop the port.
Palmer said he had full confidence in the quality of work provided by MCC, which had built 40-50 coal mines “of a higher standard than in Australia”.
“They’re much securer than Australian companies,” he said. “If you make a mistake in Australia you don’t get shot for it.
“The Chinese are the biggest coal producers in the world, they produce nearly 2 billion tonnes of coal. We’re minnows compared to them. The government mines are very well run. It is the privately run Chinese mines in which all the fatalities occur.”
The cost of producing coal from the two proposed underground longwall mines will be lower than from the open cut dragline operations when they are expected to be completed in 2013 or early 2014, and at $35 per tonne would be cheaper than railing coal to China from Mongolia, Palmer said.
“Our feasibility studies have shown that our underground operations will have lower cost per tonne than open cut. It’s because the open cut is so high in capital expenditure because of the draglines,” he said.
“Our seams are running nearly flat near the surface and are very easy to underground mine.”
Palmer said the four mines were expected to produce around 13Mtpa each of thermal coal.
