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BT Mining new driver for Coast coal

BT Mining new driver for Coast coal

The public perception may be that the New Zealand coal industry, and especially the bituminous export sector on the West Coast of the South Island, have faded into history along with former state-owned collier and liquidated dominant player Solid Energy (SE).

Certainly SE has all but disappeared from the industry to which it briefly gave so much hope and investment, but a new company, privately owned, has emerged to take its place not only on the West Coast but in the sub-bituminous mines of the Waikato in the North Island.

BT Mining is the new driver of West Coast coal production and its arrival on the scene has signalled that the New Zealand coal industry is indeed alive and, if not altogether well, it’s at least climbing out of the hole into which it and SE were consigned by the 2007-2008 Global Financial Crisis.

BT Mining is an association of recently de-listed Australian collier Bathurst Resources and the Nelson-based Talleys food company, with Bathurst holding 65% and Talleys the rest.

The new company has been part of a reemerging optimism in the sector on the West Coast, says E Tu union organiser and national mining advocate Garth Elliott.

“Coal-mining on the West Coast has certainly retracted a fair bit,” he told MiningNZ.

“We bounced along the bottom for a while but things are looking promising.

“BT Mining has been buying a lot of SE assets, coal prices have come back a little bit, and there’s a bit of confidence out there actually.”

The underlying cause of the new optimism is the recovering – though still wildly volatile – price of high-grade coking coal, a vital ingredient of the steel industry, of which there is a constant world-wide shortage.

That price has been as low as $US47 a tonne and as high as $US308/t in the past few years, against a broadly recognised benchmark average of $US150/t as the level at which New Zealand coking coal mines are economically viable.

Of course coking coals make up only half of New Zealand’s total production of about four million tonnes a year, the rest being thermal coals, mostly produced in the North Island, which are used by domestic industries.

The price local businesses pay for thermal coals
sets itself just below the cost of imports, and, like demand, is low-margin but stable.

It’s the West Coast coking coals, which are subject to the global spot price driven largely by Australian producers in cahoots with Japanese steelmakers, that make the export dollars for New Zealand, and which have suffered most in the volatility of the past few years.

That price is currently bouncing around the $US200/t mark, making it attractive to New Zealand exporters.

In the interim most of the old SE assets were mothballed and it was always going to take an angelic investor to get them back into production again.

That angel has materialised in the form of BT Mining, an association of the recently de-listed Australian collier Bathurst Resources and the Nelson-based Talleys food company, a major user of thermal coals.

The coking coal price-crash had severely hurt Australian-owned Bathurst which had finally triumphed in a long-running consenting battle to get a major West Coast bituminous resource into production when the project was knee-capped by the downturn.

Bathurst, under chief executive Richard Tacon, went to Talleys with a scheme to jointly purchase not only the parts of SE that provided most of the food company’s thermal coals – the big Waikato opencast mines Rotowaru and Maramarua – but also the main West Coast bituminous export mine, Stockton.

Stockton had continued to operate throughout the downturn, albeit at a production level of less than a million tonnes a year, down a third from its heyday.

Talleys, which uses about 50,000t of thermal coals a year, liked the idea, and BTMining was formed with Bathurst holding 65% and Talleys the rest.

The extra attraction of Stockton to Bathurst is that it’s adjacent to the as-yet-untouched Escarpment field over which it won its Environment Court consenting battles.

That a company was prepared to step into the vacuum left by SE was probably just as important to the resurgence of the West Coast coal industry as was the recovery in the coking coal price – it was an expression of confidence in the industry that was not lost on other potential players.

SE’s assets started flying off the shelf, with local family company Birchfield Coals snapping up the old Liverpool and Strongman opencast mines, and quickly getting Strongman back into production.

The revival of Liverpool is “waiting for the market to come right,” director Alan Birchfield told MiningNZ, adding that coal generally, and that on the Coast in particular, “has a good future – there are no alternatives”.

Birchfield noted also that BT Mining’s play in the domestic market has heightened competition in local thermal coal production.

In Southland, the site of its brave scheme to make New Zealand self-sufficient in transport fuels by opening up the region’s vast lignite deposits, SE has sold off its Ohai and New Vale opencast mines to Greenbriar, a subsidiary of the Palmer MH Group.

BT Mining new driver for Coast coal

The underlying cause of the new optimism is the recovering price of high-grade coking coal.

Now that BT Mining has taken over the effective leadership role in the industry from SE, chief executive Richard Tacon is delighted with the outlook for both the coking and thermal coal markets, and for the West Coast in particular.

“We’re really excited to be taking over such a fantastic asset as Stockton, and also to be able to cement our place in the domestic thermal coal industry,” he told MiningNZ.

And far from the West Coast coal industry going down the same gurgler as SE, Tacon – no less than the likes of Elliott and Birchfield – is certain it has turned a corner and is on the way to resuming its role as a vital local employer, supplier and exporter.