Tag Archives: PCI

Contract miner CBI to develop underground mine at BBM in Indonesia

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Cokal Limited’s 60% owned subsidiary, PT Bumi Barito Mineral (BBM), has signed a binding agreement with PT Cipta Bersama Indonesia (CBI) to develop an underground mining operation at Pit 1 of the BBM Metallurgical coal mine, to produce a pulverised coal injection (PCI) product.

This strategic agreement represents a significant windfall for Cokal, as there were no plans to develop underground operations at BBM Pit 1 within the foreseeable future, given capital constraints and a high-level of requisite technical expertise, it says.

The BBM feasibility study, completed by Cokal in 2014, highlighted the importance of an underground mining operation at BBM Pit 1. A significant volume of Cokal’s JORC coal resources are considered to be most viably accessed through underground development in order to maximise financial outcomes, given lower strip-ratios, unit production costs, and the outlook for the long-term market for PCI coal products.

As part of the agreement, BBM will obtain the necessary regulatory approvals to conduct underground mining operations at BBM Pit 1. BBM has appointed CBI as the contractor in charge of the development of an underground
mine at BBM Pit 1, and the ongoing mining contractor operations for PCI coal production.

CBI has agreed to pay all mine development costs, and 100% of ongoing operating costs until delivery of coal to run of mine stockpile.

As part of this, Cokal will undertake the transport of product coal from BBM ROM to Batu Tuhup jetty, and then to market and will be responsible for the sales and marketing of the coal product. BBM shall be responsible for developing and managing additional coal transport infrastructure capacity for the delivery of coal product from the BBM Pit 1 underground mine to market.

The company added: “BBM is not required to reimburse CBI for any of the upfront capital or ongoing operating costs incurred by CBI. Rather BBM and CBI will share revenue from sale of the coal product in the following proportions: BBM 40%/CBI 60%.”

CBI has also undertaken to develop coal processing infrastructure at BBM in the near term, for use by both the underground operations and other BBM production.

The term of the agreement is for the life of the mine for the underground mining at BBM Pit 1.

BBM and CBI will immediately commence development of the BBM Pit 1 underground coal mine operations, with three key stages, each designed to optimise operations and ensure seamless integration with existing infrastructure. Stage one constitutes feasibility study and reconnaissance. Stage two is infrastructure development. Stage three is operations and logistics.

The timeline for stage one is six months, while stage two is expected to be completed in next 12 months thereafter.

Cokal CEO, Karan Bangur, said: “This agreement is another major milestone in BBM’s development and production ramp-up. Importantly, prior to the agreement with CBI, BBM did not anticipate any underground mine development for at least another decade. This agreement brings that production forward and is entirely in addition to the current targets of coal production from the open-pit operations at BBM. This will add additional cashflow and enhanced value to Cokal.

“In addition, the additional coal volumes will utilise and enhance the value of the extensive coal transport logistics chain that Cokal has developed and is expanding.

“Cokal and CBI anticipate that development of the underground project to first coal production will require approximately 18 months. During that time Cokal will further develop and enhance its logistics infrastructure capacity to accommodate a substantial increase in transported coal tonnages.”

Whitehaven Coal to acquire BMA’s Daunia and Blackwater mines

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Whitehaven Coal has executed definitive sale agreements with BHP Group and Mitsubishi Development Pty Ltd (together, BMA) to acquire 100% of both the Daunia and Blackwater coal mines in Queensland, Australia, for an aggregate consideration of $3.2 billion.

Whitehaven says the transaction delivers significant value upside with attractive growth opportunities in Queensland’s Bowen Basin, including synergies with Whitehaven’s Winchester South development project. It also transforms Whitehaven into a metallurgical coal producer in line with strategy, with pro-forma managed run of mine (ROM) production of around 40 Mt/y annum and pro-forma revenues of around 70% metallurgical coal and 30% thermal coal.

Completion of the acquisition is expected in the June 2024 quarter subject to satisfying conditions precedent including regulatory and merger control approvals.

The Daunia open-cut coal mine is 30 km south-east of Moranbah, and about 170 km southwest of Mackay in Queensland. The mine produces a hard coking coal (HCC) and pulverised coal injection (PCI) metallurgical coal products, and it is expected to produce an average of circa-4.9 Mt/y of saleable coal production over the next five years. It is expected that the remaining LOM production will continue until 2040. Daunia is adjacent to Whitehaven’s Winchester South development project in the Bowen Basin. Following the acquisition, Daunia’s coal products will continue to be exported to customers across Asia through the Dalrymple Bay Terminal near Mackay.

Back in 2020, BMA announced a A$100 million ($64 million) investment and new jobs as part of the introduction of 34 autonomous trucks at the mine.

The Blackwater coal mine is an open-cut mine which lies 73 km south-east of Emerald in Queensland and is expected to produce an average of circa-12.4 Mt/y of saleable coal production over the next five years. It is one of the largest coal mines in Australia, with a strike length of 80 km, and has the largest dragline fleet (7) in the Southern Hemisphere. Both HCC and semi soft coking coal (SSCC) metallurgical coal products are mined at Blackwater. The remaining LOM production is expected to be greater than 50 years. Blackwater’s coal products are exported to customers across Asia through the RG Tanna Terminal north of Gladstone.

Paul Flynn, CEO & Managing Director of Whitehaven, said: “This is a compelling transaction for Whitehaven that accelerates our strategy, transforms our company and delivers substantial value for our shareholders.

“This transformational acquisition will pivot our portfolio towards metallurgical coal, which has been a core pillar of our strategy for many years making this a better balanced business. Our thermal coal business remains strategically important as we continue to provide much-needed coal products to support the global energy transition and as customers seek our high-quality and high-CV products to limit their emissions.

“This is a highly attractive and materially earnings accretive acquisition, with considerable upside potential, which we expect will deliver meaningful returns to our shareholders for many years to come. It strengthens our portfolio of quality, long life assets in attractive locations providing geographic and operational diversification and scale benefits.

“We look forward to completing the transaction and welcoming the teams at Daunia and Blackwater into the Whitehaven business, and working with the local community and other stakeholders who will remain an important part of our operations.”

NRW’s Golding subsidiary extends mining pact at Baralaba North PCI mine

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NRW Holdings Limited says its Golding Contractors Pty Ltd subsidiary has received a Binding Letter of Intent to enter into a 5.5-year Mining Services Agreement with Wonbindi Coal Pty Ltd at the Baralaba North Mine in Queensland’s Bowen Basin.

The award is valued at approximately A$800 million ($592 million) and, the company says, continues the strong relationship between Golding and Wonbindi Coal Pty Ltd where Golding has provided the Contract Mining Services at the Baralaba North Mine over the last four years.

The scope of work remains the same and includes maintaining and operating a client owned fleet of equipment, producing an ultra-low volatile pulverised coal injection coal. The original contract included overall mine planning; the removal of topsoil; drilling, blasting, loading and hauling overburden; loading and hauling of coal; and handling coal through the crushing and screening plant.

The agreement will commence on July 1, 2022.

Cokal and China Rail set out five-year plan at BBM coal project

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Cokal says it has signed a memorandum of understanding (MOU) with China Railway 21st Bureau Group International Engineering Co (China Rail), to construct the infrastructure planned for mining at Cokal’s BBM metallurgical coal project in Central Kalimantan, Indonesia.

China Rail, a subsidiary of China Rail Construction Corporation (CRCC), has sent a team to the BBM site to carry out a site survey to finalise estimations for the costing of infrastructure construction to enable the parties to conclude a formal contract.

The MOU envisages China Rail carrying out road construction, jetty construction, and overburden stripping and coal mining at the BBM project, the ASX-listed company said.

The Bumi Barito Mineral project (BBM) is a PMA company with an ownership structure of 60% Cokal and 40% Indonesian owners. BBM has defined a total resource of 264 Mt comprised of 10.5 Mt measured, 13.5 Mt indicated and 240 Mt inferred Resources in accordance with the JORC Code 2012.

Road construction at BBM as envisaged in the MOU will be in two areas: 12 km of haul roads from the mine pits to the Krajan jetty to transport coal from both pulverised coal injection and coking coal pits to the Krajan jetty; and upgrading of an existing 55 km logging road to connect to 45 km road already in use leading to a jetty located at Lahung Tuhup, 160 km downstream of the Krajan jetty, bypassing the shallowest parts of the river.

In terms of jetty construction, two barge-loading jetties will be built. The first will be constructed at Krajan adjacent to BBM, and the second at the end of the 100 km haul road at Lahung Tuhup.

The construction of each jetty will incorporate a design to accommodate shallow draft barges, allowance for water depths in excess of 10 m during the wet season, a 1000 t/h barge loading conveyor, and coal handling and storage facilities.

China Railway will also assist in funding the capital investment related to overburden removal, coal mining and associated mine infrastructure including the provision of pit haul roads, sedimentation ponds, camp site facilities, clinic, workshops, fuel storage and mess room, Cokal said.

The MOU specifies a contractual period of five years with an option to extend for an additional five years based on mutual agreement between the parties.

In the meantime, Cokal has signed a barging term sheet with HSM Marine, a Singapore-based barging company with operations in Indonesia, the rest of South East Asia and the Middle East, to barge the coal from BBM.

Cokal’s new strategy to use contractor funding to commence construction, mining and barging has necessitated modifications to its five-year plan, it said. Commencement of the BBM mine construction will begin with China Rail initially constructing a 5 km haul road from Pit 2 (PCI coal production) to the Krajan jetty. At the same time, China Rail will construct a temporary barge loader suitable for initial production.

MACA wins contract mining job at Blackwater coal project in Queensland

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MACA is about to start work on Wealth Mining’s Bluff coal project in the Bowen Basin of Queensland after being chosen as the main contract miner.

The contractor will carry out all open-pit mining activities including planning, procurement, management and supervision, load and haul, drill and blast, and water management at the project, with the agreement expected to generate some A$700 million ($507 million) in revenue over the 10-year mine life.

MACA said the project will broaden its commodity exposure and geographical footprint, while allowing it to use larger fleet classes including 350 t excavators and 220 t and 180 t dump trucks. The fleet is expected to be a mix of acquired and hired equipment with MACA estimating capital expenditure of A$45 million.

Bluff, which was acquired by current owner Wealth Mining via its takeover of Carabella Resources in February 2014, will produce around 12 Mt/y of pulverised coal injection product. Coal will be processed with existing infrastructure at the Cook colliery (pictured), which was recently acquired and recommissioned by the Bounty Mining Group and has readily available port and rail access.

The project has a granted mining lease in place together with environmental authority approval.

Contract works will start in the December quarter with first coal expected to be produced in the March quarter of 2019.

“The project will be an ‘Alliance’ style contract aimed at delivering the lowest possible cost to our client,” MACA said. Employee numbers are expected to total 140 people.

MACA will finance the drop cut to first coal and other minor project works via a secured working capital facility of A$25 million. The contract takes the company’s work in hand position to A$1.982 billion and leaves it on track to hit revenue guidance of A$620 million for the full financial year to end-June 2019.