Western Australia and coal

From Global Energy Monitor

While Western Australia has a substantial mining industry, coal plays a relatively small role in the State's economy. Approximately 6.9 million tonnes of coal was produced in 2011/12[1], overwhelmingly for domestic use in power generation.

To date there have been limited coal exports from the state. The Indian company Lanco Infratech, which owns Griffin Coal, has an allocation for the export of 750,000 tonnes of coal through Fremantle Ports upgraded Kwinana Bulk Terminal. However, in 2011/12 the company exported only 488,000 tonnes.[2] Lanco have proposed that the port facilities at Bunbury Port be upgraded to allow for the export of 15 million tonnes of coal a year. In mid-July 2013 the Western Australian Environmental Protection Agency recommended to the Minister for Environment that the proposal be approved, with some conditions. The proposed approval is open for public comment until the end of July 2013.[3]

Other coal export proposals have been floated but have foundered: Rey Resources proposed coal exports from its proposed Duchess/ Paradise Coal Project initially through the mothballed Derby Export Facility and later on the proposed Point Torment port in the Kimberley. However, with the global coal market depressed, Rey Resources have all but given up on the project and instead is seeking to become a minor player in oil and gas projects in the Canning Basin. Blackham Resources has also touted the possibility of lignite exports from its proposed Scadden mine through the Port of Esperance. In its most recent corporate presentation in June 2013[4] and its December 2012 quarterly activities report the company didn't even mention its coal project.[5]

Coal fired power stations

Existing coal-fired power stations

In 2011 approximately half of the electricity generated in the the South West Interconnected System of Western Australia, covering the major urban centres, was from coal-fired power stations. Gas fired power generation was the most significant other fuel with minor contributions from renewables and oil. In it's 2012 energy strategy the government acknowledged that "coal-fired electricity generation will need to adapt to handle an increasingly variable demand profile and to respond to the requirements of reduced greenhouse emissions".[6]

The sale of Griffin Coal to Lanco and Premier Coal to Yanzhou Coal has created concern that an emphasis on export markets would drive domestic coal and power prices up. In its energy strategy paper the government noted that a shift to exports could "place increased pricing pressures on companies when renegotiating or contracting for additional coal supply arrangements."[6] The government has flagged that ways it could address this concern could be to conduct "regular coal security assessments" and by "preserving existing domestic coal supply obligations under State Agreements."[7]

Verve Energy, the government-owned generator operates two coal-fired power stations. These are the 854 megawatt Muja power station;[8] and the 340 megawatt Collie power station.[9]

Verve Energy also operates the Kwinana Power Station which can be fuelled by coal, gas or oil.[10]

A cap imposed on the total amount of power that the government-owned Verve Energy could supply to the market led to Griffin Energy building the 208 megawatt Bluewaters 1 Power Station and the 208 megawatt Bluewaters 2 Power Station. These were the first privately-own coal fired power stations supplying the main power grid in Western Australia.[11] Construction began on Bluewaters 1 in 2006 and Bluewaters 2 the following year. Both were commissioned in 2009.[12] Following the financial collapse of Griffin Group, the administrators sought to sell the power stations. In November 2012 the administrators announced that contracts for the sale of the power station for $1.2 billion had been exchanged. Administrator Scott Kershaw stated "there is the potential for further generators to be built, approval has already been granted for Bluewaters Three."[13] The two Japanese companies -- Sumitomo and Kansai Electric -- are expected to take over the power station in December.[14]

Proposed coal-fired power stations

Griffin Energy have proposed the addition of a further two 208 megawatt units at the Bluewaters Power station. The company states that the project, which is referred to as the Bluewaters Power Station Expansion, would lift the total output at the station to approximately 830 megawatts. The two additional units, the company states, "are planned for completion in 2013 and 2015 respectively." The company states that the expansion project "will be capable of adopting carbon capture technology in the future, once this developing technology becomes commercially viable in Western Australia."[15] The possibility of the expansion proceeding hinges, in part, on the business strategy pursued by new owners of the power station.[16]

Abandoned coal-fired power station proposals

Coal mining

Existing coal mines

Griffin Coal, which is owned by the Indian company Lanco Infratech, operates two major coal mines, the 1.5 to 1.8 million tonnes a year Muja Mine, which supplies Verve Energy's nearby Muja power station, and the Ewington Mine supplies the Bluewater Power Station. (The Ewington mine is also referred to as the "Ewington 1 & 2 Mines"). Griffin have stated that they aim to increase the combined production of the mines from the 3.6-3.7 million tonnes produced in 2012 to approximately 4.7 - 5 million tonnes by April 2013 and 16 million tonnes by 2015.[17]

Premier Coal operates the open cut Premier mine which the company states is the "is the sole supplier of the Collie A power station (1-1.2 million tonnes per year) and also supplies nearly 2 million tonnes to Muja Power Station." The company also states that it supplies coal to the Kwinana Power Station as well as "Iluka Resources, Tiwest, Bemax Cable Sands and a number of nurseries."[18] Wesfarmers Resources sold Premier Coal to Yancoal in September 2011 for $296.8 million.[19]

Proposed new coal mines

  • Rey Resources, which holds extensive exploration licences for coal south of Derby. The company states that the coal in the region is of thermal quality only and would be for export to China and India. The company states that the closest deepwater port is at Point Torment, approximately 175 kilometres to the north. (The alternative closer port at Derby would have limited potential due to the substantial tidal range).[20] Rey Resources has touted a number of notional projects including the Duchess/ Paradise Coal Project, which the company states it is investigating as a possible export thermal coal operation comprising open cut and underground mines[21] and the Liveringa Coal Project, a possible underground coal mine.[22] The company has also stated that it is also considering coal bed methane[23] extraction and underground coal gasification.[24]

Possible coal export projects

  • In early August 2011 Lanco Infratech, the parent company of Griffin Coal -- which owns and operates the Collie coal mines -- met with the West Australian Premier Colin Barnett. According to a report in the West Australian, the meeting was to discuss the company's "hopes to complete an expansion of Bunbury Port's inner harbour by the end of 2013 to allow it to start exporting coal to India" after a tripling of production from the Collie coal mines.[25] Following the purchase Lanco have sought a series of financial favours from the West Australian government -- all of which have been rejected. It sought a waiver of its debts with Fremantle Ports in February and a reduction in port handling fees of 75%. The company also sought royalty relief on its Collie mine.[26]
In May 2012 Fremantle Ports warned Lanco that unless it paid outstanding debts -- believed to be approximately $8.5 million -- it wold be blocked from exporting coal. The West Australian newspaper reported that the debt related to "work commissioned on Lanco's behalf by Fremantle Port that allows Lanco to export more than a million tonnes of coal through Kwinana."[26] The Wall Street Journal reported that Lanco had agreements to export "around 750,000 metric tons of coal a year" through Fremantle Port's Kwinana Bulk Terminal.[27] Several days after the warning Lloyds List reported that Fremantle Ports’ manager for external affairs Ainslie de Vos stated that "arrangements have been made between the parties for payment of all outstanding monies."[28]

Coal exploration projects

  • Western Coal, a Canadian company have applied for a coal exploration licence adjoining the Vasse Coal Project, which looks likely to be rejected by the West Australian government.[29] Walter Energy states that Western Coal "is a producer of high quality metallurgical coal from three mines in northeast British Columbia (Canada), high quality metallurgical coal and compliant thermal coal from four mines located in West Virginia (USA), and high quality anthracite and metallurgical coal in South Wales (UK).[30]
  • Attila Resources are exploring the Talisker North Coal Project approximately 650 kilometres north of Perth. The company has indicated that the exploration program is at an early stage. The company states that "an initial exploration program would focus on geophysical surveys and aircore drilling. There is potential to define thermal coal resources within the project area.[31] In its June 2012 quarterly report the company states that the initial drilling at the northern end of its exploration area only resulted in "thin coal seams" being found.[32] Attila reported that it found a coal seam which varied between 3.5 metres and 4.3 metres but at a depth ranging between 47 and 91 metres. Attila has stated it plans to undertake further drilling in the hope of definging a 50 to 100 million tonne resource. While touted as a potential export project through Carnarvon, no export infrastructure currently exists.[33]

Several companies have commenced coal exploration work in the Kimberley region of far north-west of Western Australia. (See Proposed coal projects in the Kimberley, Western Australia for more details). These are:

  • Canning Basin Coal, a subsidiary of TPL Corporation, has three exploration licences over 724 square kilometres of the Canning Basin. The company has touted its potential as the Lightjack Hill Coal Project.(TPL had its origins as a web-based publisher while Canning Basin Coal has no operating coal or other mining projects.)[34]Canning Basin Coal suggests that one possibility with coal in the area could have "Underground Coal Gasification potential".[35][36]
  • Cullen Resources, another junior exploration company, has touted the Canning Basin Coal Project (Cullen Resources) with Advaita Resources. The company states that the project cover 1315km² "of tenements and applications". It also reports that from a 23 hole drilling program, coal was discovered in only four holes and then only thin seams. (The company states the seams are "0.19-0.55m thick".)[39] In its September 2012 quarterly activities report Cullen stated of this and its other coal interests, that "currently there is minimal activity on these projects pending tenement approvals, and Cullen may seek to farm – out these projects pending improvement in investor sentiment in the coal sector."[40] In an October 2012 investor briefing the company did not mention its coal properties or list them in its "near term activities" list.[41]

Rejected coal mine proposals

The Vasse Coal Project was proposed in the Margaret River region in the South West. The company promoting the project is Vasse Coal Management Pty. Ltd, which is 70% owned by South West Coal Ltd and 30% by Vasse Coal Pty Ltd. South West Coal in turn is a subsidiary of the AMCI Group while Vasse Coal is a privately owned company.[42] In March 2011 the Western Australian Environmental Protection Authority announced that it had decided that "there is adequate information to demonstrate that Vasse Coal Management’s coal mining proposal is environmentally unacceptable."[43] The Environment Minister, Bill Marmion, has yet to accept the EPA recommendation. However, the West Australian Premier, Colin Barnett supported the EPA decision. "I had expressed as Premier that I thought that was a very doubtful prospect to have an underground coal mine in a prime wine growing area of WA and clearly there were large environmental risks to the water supply and water quality in the aquifers. It does illustrate the point that this Government allowed the process to be conducted properly, independently by the EPA. But it also shows that while this is a pro-development Government, it is not development at any cost. And where projects are not acceptable they will not be approved," he said.[44] The opposition Labor Party has also backed the rejection of the proposed mine.[45] Following a sustained local campaign, in July 2012 the Western Australian Minister for Mines and Petroleum, Norman Moore terminated all current coal exploration applications within a 230-square kilometre coal zone around Margaret River.[46]

Carbon Capture and Storage research projects

There are a number of Carbon Capture and Storage projects in Western Australia. These are the:

In June 2009 the Western Australian Mines and Petroleum Minister Norman Moore announced that the state government would contribute $250,000 towards the $522,000 cost of the Lower Lesueur Carbon Dioxide Geosequestration Study. The study, the media release stated, will "study seismic data and existing well cores to help identify potential injection points and migration behaviour of carbon dioxide."[47] In its annual report the Department of Mines and Petroleum stated that the study "has implications for the development of clean coal technology and could contribute to the long-term viability of Western Australia's coal industry."[48]

Other coal projects

Perdaman Industries, via its subsidiary Perdaman Chemicals and Fertilisers, has proposed the establishment of a coal-to-urea plant near Collie in Western Australia. In late June 2011 Perdaman Industries lodged a claim in the Supreme Court of Western Australia for $3.5 billion against Lanco. Perdaman claimed that financing for its proposed $3.5 billion coal-to-urea plant collapsed after Lanco sought substantial price increases for the supply of coal and threatened to withhold supply if they werent agreed to.[49]

Coal export terminals

Existing coal export terminals

  • Kwinana Bulk Terminal south of Perth. Since January 2007 Griffin Coal has been exporting coal through the Kwinana Bulk Terminal. In May 2011 Fremantle Ports announced that it was "concluding negotiations with Griffin Coal to enable the export of 750,000 tonnes of coal annually over four years" through the terminal. "The new arrangement with Griffin Coal will cover the transition period until planned new facilities for handling coal are developed at Bunbury or elsewhere," a media release from Fremantle Ports stated.[50]

Proposed coal export terminals

  • Rey Resources is proposing to transport coal approximately 140 kilometres from its proposed Duchess/ Paradise Coal Project to the Derby Export Facility. Rey proposes that coal would be deposited into a 70,000 tonne stockpile, sent via a conveyor to a barge loader and then to barges capable of carrying 8,500 tonnes each. The company then proposes that the barges be towed approximately 12 nautical miles to an existing vessel mooring point in King Sound. The company proposes that a 55,000 tonne vessel could be loaded in two days.[51] The company states that the closest potential deepwater port is at the proposed Point Torment Port, approximately 175 kilometres to the north.[52]

Articles and resources


  1. Department of Mines and Petroleum, "2011-12 Financial year Quantity and Value for the Western Australian Minerals and Petroleum industry", November 15, 2012.
  2. Fremantle Ports, "2012 Annual Report", Fremantle Ports, September 2012, page 37.
  3. [http://www.epa.wa.gov.au/News/mediaStmnts/Pages/EPArecommendsapprovalfornewBunburyPortberthandcoalexportfacility.aspx?pageID=330&url=News/mediaStmnts "EPA recommends approval for new Bunbury Port berth and coal export facility", Media Release, July 17, 2013.
  4. Blackham Resources, ">Blackham Resources Limited: Gold Coast Resources Showcase", June 12-13, 2013.
  5. Blackham Resources, "Quarterly Report: December 2012", January 31, 2013.
  6. 6.0 6.1 Government of Western Australia, "Strategic Energy Initiative Energy 2031: Building the Pathways for Western Australia's Energy Future", August 2012, page 15.
  7. Government of Western Australia, "Strategic Energy Initiative Energy 2031: Building the Pathways for Western Australia's Energy Future", August 2012, page 15.
  8. Verve Energy, "Muja", Verve Energy website, accessed November 2010.
  9. Verve Energy, "Collie", Verve Energy website, accessed November 2010.
  10. Verve Energy, "Kwinana", Verve Energy website, accessed December 2010.
  11. Griffin Energy, "Bluewaters Power Station", Griffin Energy website, accessed December 2010.
  12. Griffin Energy, "Our History", Griffin Energy website, accessed November 2010.
  13. "Griffin Coal power plants sold to Japanese", ABC News, November 6, 2012.
  14. Raelene Heston, " Bluewaters sold: Japanese owners by Christmas", Collie Mail, November 8, 2012.
  15. Griffin Energy, "Bluewaters Power Station Expansion", Griifin Energy website, accessed December 2010.
  16. "Griffin Coal power plants sold to Japanese", ABC News, November 6, 2012.
  17. "Lanco plans to raise Griffin coal production to 16 mn tonnes", The Economic Times, November 11, 2012.
  18. Premier Coal, "Our Cutomers", Premier Coal website, accessed December 2010.
  19. Nick Evans, "Wesfarmers agrees to $300m Premier Coal deal with Yancoal", Perthnow, September 28, 2011.
  20. Rey Resources, "Canning Basin Overview", Rey Resources website, accessed December 2010.
  21. Rey Resources, "Duchess/ Paradise", Rey Resources website, accessed December 2010.
  22. Rey Resources, "Liveringa", Rey Resources website, accessed December 2010.
  23. Rey Resources, "Coal Bed Methane", Rey Resources website, accessed December 2010.
  24. Rey Resources, "Underground coal gasification", Rey Resources website, accessed December 2010.
  25. Amanada Saunders, "WA power dispute snares Indian billionaire", West Australian, August 5, 2011.
  26. 26.0 26.1 Peter Kerr, "Port issues ultimatum to Lanco", The West Australian, May 9, 2012.
  27. Stephen Bell, "Fremantle Ports Warns India's Lanco", Wall Street Journal, May 9, 2012.
  28. Oliver Probert, "Lanco, Fremantle Ports settle fee dispute", Lloyds List, May 11, 2012.
  29. Georgia Loney, "New coal fight looms for Margaret River", The West Australian, April 7, 2011.
  30. Walter Energy, "Walter Energy and Western Coal Complete Plan of Arrangement", Media Release, April 1, 2011.
  31. Attila Resources, "Talisker North Coal Project", Attila Resources website, accessed November 2012.
  32. Attila Resources, "Activities report for the Quarter ended 30 June 2012", August 2012.
  33. Attila Resources, "Quarterly Activities Report September 2012", October 31, 2012, page 3.
  34. TPL Corporation, "TPL Corporation", TPL Corporation website, accessed December 2010.
  35. Canning Basin Coal, "Canning Basin Coal", Canning Basin Coal website, accessed December 2010.
  36. Robin Bromby, "Coal tempo gathers pace in WA", The Australian, July 12, 2010.
  37. Stratum Metals, "Investor Presentation", March 8, 2012, page 15.
  38. Stratum Metals, "Quarterly Activities Report", Stratum Metals, October 31, 2012, page 7.
  39. Cullen Resources, "Key projects", Cullen Resources website, accessed November 2012.
  40. Cullen Resources, "Quarterly Report for the period ended 30 September 2012", Cullen Resources website, October 31, 2012, page 18.
  41. Cullen Resources, "Investor Update - October 2012", Cullen Resources, October 16, 2012, page 21.
  42. "Vasse Coal Project Ownership", Vasse Coal website, accessed December 2010.
  43. Environmental Protection Authority, "Level of Assessment for Vasse Coal Management’s Vasse Coal Proposal", Media Release, March 21, 2011.
  44. Georgia Loney and Gareth Parker, "EPA says 'no' to Margaret River coal mine", The West Australian, March 21, 2011.
  45. "Coal fight", Margaret River Mail, April 6, 2011.
  46. "Margaret River coal mining applications terminated", ABC News, July 24, 2012.
  47. "Government helps coal industry strive for cleaner future", Media Release, June 9, 2009.
  48. Department of Mines and Petroleum, "Annual Report 08-09", Government of Western Australia, September 2009, page 7.
  49. Colin Kruger, "$3.5bn writ hits mines deal", Sydney Morning Herald, June 30, 2011.
  50. "New export proposals for Kwinana Bulk Terminal", Media Release, May 18, 2011.
  51. Rey Resources, Duchess Paradise Project: Environmental Referral: Supporting Documentation, June 9, 2011, pages 46-47. (Pdf)
  52. Rey Resources, "Canning Basin Overview", Rey Resources website, accessed December 2010.

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