Whitehaven announces funding of $1.2 billion from ANZ to build new mine.
http://www.miningweekly.com/article/whitehaven-says-secures-a12-bln-credit-line-2012-11-08
Interesting…..
Whitehaven coal, according to the media, have been increasingly bearish on coal pricing recently, Just goes to show doesn't it Tony what these mining companies say and what they end up doing can be completely the opposite.
Some discussion on once China completes the leadership transition growth may ramp back up to 8% first quarter 2013.
Bhp are in the process of increasing coking coal production significantly, Whitehaven ramping up in a weak market, Hancock coal, GVK, Aldani, Bandanna Energy similar…..Mmmmm me thinks things are looking up Tony!
Any idea whether they will use the funds for expansion, infrastructure or exploration?
The directors of these companies are clearly capable of planning strategies based on supply, demand and other price influences over longer timeframes than the recent short term factors which have resulted in the current low price for coal. They clearly expect the demand and price for coal to pick up within a not too distant future in order for these projects to be worth committing to. Of course, having the finance and approvals in place does not necessarily mean that all the projects will proceed according to current timetables. A prudent businessman would have preparations in place in anticipation of more favorable conditions, and might delay implementing his plan, but clearly there is anticipation of imminent action in these plans! On a smaller and less significant scale I also note that Xstrata have applied to increase their production tonnage from Mangoola coal at Muswellbrook from 10 million p/a to 13.5 million p/a., as well as plans having just been publicly released for an extension at Drayton mine near Muswellbrook.
Jack, I've read that the government transition in China applies to all levels of government, and will be ongoing for up to a year, and that has caused significant disruption to the growth pattern there, with an expected resumption of stimulus to their economy to occur gradually as members of government are replaced.
I wouldn't get too excited by one little mine and what it may mean for coal resources on the east coast. To put things in perspective Aus is the 4th largest exporter but that only comes up to 6.7% of global production. Aus consumes 54% of its own production which is likely to diminish as gas replaces coal fired power generation.
China proposes to triple power generation over the next 2 decades and up its coal demand by something like a billion tonnes per annum over that time. But then we have Russia which is looking to increase its exports to China by 5X over the next decade. The US is also expected to see its coal exports rise as well as shale gas continues to expand. China and Mongolia combined have huge coal reserves but to complicate the picture even more China is making concerted efforts to reduce its reliance on fossil fuels like coal. It has its own shale gas strategy that it is developing.
India has lots of coal but no infrastructure to capitalise on it. It is easier to import and land it near where it is needed than mine its own and tranship it. It also has a cost barrier to energy production. While it would like and does need to increase its energy output ability unfortunately it doesn't have the local markets with the ability to pay the true cost of production. Their desire to industrialise is being hampered by this cost barrier and I don't expect to see India grow faster than a few %pa over the next decade at least.
The upshot so to speak is one of mixed messages from the market but I tend to see the next decade as difficult for the miners as demand falters and alternatives like gas and shale gas push into the market. Coal has to stay cheap to compete so I don't see another mining boom anytime soon. Not in my lifetime anyway.
Hey Freckle
That's the most positive sounding post I've read from you in ages. You must have gotten some good nookie last night and got up on the right side of the bed this morning. A wise man once said "To an optimist a realist appears a pessimist".
Cheers Mate
Moxi10, there are only a couple days in a year where you will catch freckle in a good positive mood. Today is one of them.
LOL……
I don't think the coal story is any where near over but certainly there are many factors and Freckle does make some interesting points. Certainly agree with some of what has been said on China and the US.
However, Europe is now turning more to coal which is interesting and demand is steadily rising. Freckle I think you are correct in relation to coal being a cheap energy alternative and with the world under economic stress coal demand is strong and getting stronger in the short to medium term.
We may not see a price 'boom', I think we have just come out the other side of price rises, but the quantities will continue to rise.
Like any cycle once the world economy comes out of the slump, which may be a long while yet, then perhaps cleaner energy sources may be more of a viable alternative.
I don't necessarily agree with the prognosis on India. I think India should grow somewhere around 5%-7%. Very interesting Freckle to hear your thoughts on the infrastructure difficulties in India…….
This issue could be a major contributor to the reasoning why it's more economical for India to come to the Galilee Basin and establish mines, rail infrastructure and port infrastructure……. At any rate it must be a good thing for Australia to have such massive investment happening.
Coal price has hit the bottom and on the rise following Iron ore which has rebounded back to $122 a tonne.
moxi10 wrote:Arhhh thanks Tony……what I was trying to say but only better communicated lol.
Here's an interesting article about proposed changes to the coal contract system in China. The changes may take place before the annual contract conference, usually in early December, (which should be interesting with or without changes) The results may prove a positive for coal prices
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