BHP Billiton Opens Caval Ridge Mine in Australia Despite Struggling Coal Prices
As Australia’s coal sector continues to endure low prices and tough market conditions, BHP Billiton (ASX:BHP) (NYSE:BHP) is fighting on.
The Australian mining company announced on Monday the opening of its $3.4 billion Caval Ridge coal mine in Queensland’s Bowen Basin. The mine, which is a 50-50 joint venture with Mitsubishi Corp, was delivered ahead of schedule and under budget and expected to produce 5.5 million tons of coal per year.
“Today’s opening of the Caval Ridge mine is a significant milestone for BHP Billiton,” said Dean Dalla Valle, BHP’s coal president.
“The operation will produce metallurgical coal for the steel industry and has been constructed with the latest technology to be one of the most productive, sustainable and highly performing metallurgical coal mines in the world.”
The mine's workforce will include 21 percent females and three percent indigenous workers. In addition, 43 percent of the workforce will be new to the mining industry. BHP, which announced last month it would cut 700 jobs from its Queensland coal operations, confirmed the mine will create 500 new jobs.
“We are confident that if we maintain our productivity focus then we will continue to have a globally competitive business that will provide employment opportunities for generations to come,” Valle said.
Last week China announced it would impose tariffs on imports of certain types of coal, raising concerns among companies and analysts about the Australian coal sector’s outlook.
“The exact impact of an import tariff on domestic and seaborne volumes is subject to a range of coal price and demand elasticities,” said Commonwealth Bank of Australia analyst Lachlan Shaw.
“However, what is certain is that a coal import tax would be negative for China’s coal import demand and, by virtue of likely resultant slower seaborne demand, seaborne coal pricing.”
According to the Steel Index, the price of Australian coking coal has dropped more than 15 percent this year, to around $112 a ton.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.