A multinational mining company suggested it might not pursue a $1.5 billion coal development in Central Queensland’s Isaac region.
South32 is still deciding whether to invest in its new Eagle Downs Coal Project, 25km south east of Moranbah.
The proponent confirmed back in October that it was continuing to study the feasibility of constructing a multi-seam underground longwall metallurgical coal mine, processing plant and dedicated rail spur and train loadout facility.
500 jobs could go
The mine was promised to create 500 jobs and export an average of 4.5 million tonnes of coal per annum from one longwall throughout the first decade of full production.
A final investment decision was due at the end of 2020 and speculation is growing that South32 is now preparing to sell its 50 per cent stake in the project and exit the venture altogether.
Chief executive Graham Kerr previously revealed he was not impressed about the potential return on investment.
“To date I have not seen enough financial attractiveness to say we would want to invest in it but the study is not finished,” he said according to News Limited.
“In the short term the met coal price is under some pressure, some other projects are getting built, the returns I have initially seen do not super-excite us but there is still time for that to be finalised. I am slightly pessimistic but, if the team can demonstrate it generates the kind of returns we are looking for, we will look at it.”
Eagle Downs has been in care and maintenance since 2015 due to a drop in coal spot prices and the financial collapse of Eagle Downs Coal Management. Joint owner and China-based Baowu has not confirmed whether it would buy out South32’s stake.
South32 recently secured regulatory approval to sell its stake in South Africa Energy Coal to Seriti Resources.
“We have progressed the divestment of South Africa Energy Coal, completed the review of our manganese alloy smelters, announced an agreement for the sale of TEMCO in Australia and placed Metalloys in South Africa into care and maintenance,” company chair Karen Wood said at the 2020 annual general meeting.
Seriti CEO Mike Teke suggested the transaction was necessary to ensure the target company could remain afloat.
“This is another step towards greater certainty for employees, communities and suppliers at and around these operations of a sustainable future,” he said in a public statement.