METALLURGICAL COAL
Coking Coal Hotspots
March 2019
The North American coal industry has made a lot of noise in the media this year, but it’s no secret that the coking coal market is dominated by Australia. Of the top-ten producing sites—which collectively produce 27% of the world’s coking coal—Australia holds seven, including the top five positions. In fact, Australia makes up 51% of the world’s coking coal supply; a percentage that is set to increase over time as further deposits are developed. Mozambique is the only other country not located in the Americas to have a mine in the top ten: Vale-owned Moatize, which produces 2.2% of the world’s coking coal.

 

Moatize

Despite sitting comfortably in the top ten, the Moatize mine hasn’t been as productive as was originally hoped. The mine began production in 2010, and delivered its first trainload of coal in 2011, but despite the construction of a port-linked Nacala railway line, freight has been a consistent issue. The Nacala rail line became operational in the December Quarter of 2015, but the 950km rail distance and heavy transport tariffs have resulted in transport costs in excess of US$50/t.

Additionally, the mine has had a difficult time meeting its production guidelines for hard coking coal until recent years. HCC has accounted for around half of the mine’s product mix—far lower than the 65%+ originally hoped for. This ongoing problem has impacted its margins, but production has begun to ramp up and operators expect to achieve at least a 60% HCC mix by 2021.

Mozambique has several other projects ramping up, but it will stay in the top-ten producing countries largely by way of Moatize’s increasing production.

 

Goonyella

Besides having the honour of one of the best mine names in the industry, BMA’s Goonyella complex is notable for being the largest coking coal project in the world. In 2019 it will produce around 18Mt—or 4.7%—of the world’s coking coal.

Like Moatize, production and freight have not been entirely smooth, but operations have generally seen a minimum of issues. Coal from the complex is generally relatively low-ash and of high volatility, and once extracted is sent 196km by rail to the BHP-owned Hay Point Coal Terminal, or the Dalrymple Bay Coal Terminal for export.

Difficult geological conditions and increased strip ratios have resulted in lower output that expected in recent years but output still remains significantly higher than the second-largest coal producing site.

 

 

Blackwater

Blackwater might not seem like the best name for a coal mine, but it is the second-largest coking coal mine in Queensland, Australia, and the world. Like Goonyella, it is also owned by BMA. It produces 13Mtpa of hard and soft coking coal, with additional thermal coal that is largely sent to domestic energy operations.

Washed coking coal is sent around 300km to the port of Gladstone. BMA’s current haulage contract allows for lower rail charges as tonnage increases, so in addition to standard cost savings from scale, haulage costs for the mine directly decrease on a per-tonne basis as shipments increase.

Rising strip ratios are likely to lead to an increased mining cost in the future, but the mine currently has an average FOB cash cost of around US$99/t.