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Xstrata plans A$15 billion coal expansion in Australia

Sun, 01/31/2010 - 6:28pm
Reuters

PERTH (Reuters) - Xstrata, the world's top thermal coal exporter, is considering up to A$15 billion ($13.3 billion) investment to boost output at its Australian thermal coal project to 100 million metric tones a year, it said on Monday.

Green Business

Xstrata is seeking an environmental approval for the first phase of its Wandoan project, which is expected to start production in 2014 and export up to 30 million metric tones of coal a year from the proposed Wiggins Island terminal.

Xstrata has identified three exploration targets around Wandoan, a spokesman said, located in the Surat basin in the north east state of Queensland, which potentially holds between 4 billion and 7 billion metric tones of thermal coal.

His comments confirmed an earlier report in The Australian newspaper that a successful exploration would result in Xstrata having four mines in the area each producing 25 million metric tones of coal per year.

That would bring the total output to around 100 million metric tones in the 2020s, the spokesman added.

Thermal coal is used by utilities for power generation.

Xstrata's bold expansion plans comes amid bullish forecasts for global coal consumption and underscores its efforts to maintain its lead position as the world's top thermal coal exporter.

If the expansion of Wandoan proceeds as planned, it could also could see the establishment of a second major thermal coal region in Australia after the Hunter Valley region in New South Wales state -- one which could continue to cement Australia's status as the world's largest coal exporter.

Global coal consumption is forecast to grow almost 40 per cent in the next 20 years as electricity demand increases, according to the Paris-based International Energy Agency.

The spokesman said Xstrata has resubmitted an environmental impact statement for the Wandoan project to the Queensland government and hopes to complete feasibility studies on the project by the end of 2010.

Xstrata has a 75 percent stake in Wandoan, while partners Itochu Corp and Sumitomo Corp each hold 12.5 percent.

(Reporting by Fayen Wong; Editing by Balazs Koranyi)

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