Glencore finalises plans for two new mines

Rapid expansion of its Australian coal holdings has stamped the Swiss-owned company as a likely long-term player in the local coal industry.

Staff Reporter

What a difference five years makes. With the February purchase of the Ulan mine from Exxon, Glencore Coal is the majority owner and operator of six major longwall mines in New South Wales. The purchase lifts the company’s managed coal production out of the region close to the 30 million tonnes per annum mark. The Swiss-owned company has achieved rapid growth through a process of targeted acquisitions since first entering Australia in 1995 with the purchase of listed coal producer, Cumnock.


Glencore’s hallmark is a management focus on maximising production and productivity, which it has succeeded largely in bringing to each of its new projects. A new mine plan and various equipment upgrades at the West Wallsend mine, near Newcastle, for instance, have begun to deliver consistently strong production results. For calendar 2001, this mine is budgeted to produce 3.54Mt.


Currently, Glencore’s most advanced projects are Beltana, within its South Bulga lease in the Hunter Valley, and nearby United, an existing bord and pillar mine, where it is developing new longwall workings. The two new mines are being established to replace tonnage from the Teralba and South Bulga, due to close in May 2001 and 2002, respectively; South Bulga because of lease constraints and geological conditions.


When Glencore bought South Bulga from Cyprus last year little recent exploration had been carried out and there was no development of future reserves.


“We took over on April 1, 2000 and in the next eight months we completed a full exploration program, did all the geological modelling, did the mine planning, completed the


Environmental Impact Statement (EIS) and the feasibility study and got board approval from our joint venture partners, Oakbridge and Nippon Steel,” said Jeff Gerard, Glencore general manager development.


With estimated mineable reserves of 21Mt, Beltana will be a 6Mtpa punch longwall mining operation for about five years, similar in concept to BHP’s Goonyella project in Queensland. (Matt Cooper recently joined Glencore as project manager on Beltana after completing a stint at the BHP project.) An exploration adit driven off the highwall in the Whybrow opencut is due to begin in April this year. Glencore said the purpose of the adit is to better understand roof and floor conditions, get a clearer indication of the geological conditions including gas content and the presence and effect of the Fordwich Sill on the coal seam, and to define geological structures not identified during surface exploration drilling. The adit will also allow the development of headings in preparation for longwall mining in late 2002.


“We are about to let civil contracts for some of the surface preparation and we are about to put to tender for the development of exploration adits, which will be about 15km of underground driveage, starting off the highwall at Bulga,” Gerard said.


Two 3km adits will be driven about 270m apart, separated by 25m x 30m pillars and each interconnected by cut-throughs. Roadways will be 5.2m wide and a minimum 2.6m high. The working seam section of the Whybrow seam is 2.6-3m. Exploration over 12 months should extract about 400,000t of coal.


“At this stage we’ve got a greenfields agreement with the Colliery Staff Association and with the CFMEU,” Gerard said.


Another project that has undergone rapid review is the nearby United mine, a 2Mtpa bord and pillar operation, which will finally become a longwall mine after previous owners first considered doing so five years ago. “Late last year we conducted a full feasibility study with additional exploration targeting specific areas where we felt we needed additional information. We’ve closed a lot of those gaps,” Gerard said.


The feasibility study confirmed, for example, that post﷓drainage is the best approach to manage in-seam gas due to low permeability. The study also confirmed the compatibility of Teralba’s chocks for use at United (the shearer and AFC will be replaced). Once mining at Teralba has finished in May, the longwall will be recovered and refurbished between June and August and installed at United. It is expected to be operational by early next year. South Bulga’s chocks will similarly be re-used at Beltana.


The United feasibility study is yet to be presented to Glencore’s joint venture partners, Xstrata and the CFMEU, but no material changes have been made to the pre-feasibility study and approvals are expected fairly quickly. Glencore has, however, made the prudent choice of ensuring that bord and pillar operations can continue if the decision is made not to longwall.


The 1Mtpa Teralba operation will be replaced with a 3Mtpa operation and the 3 Mtpa South Bulga operation will be replaced by a 4-5Mtpa mine.


“On the back of the base equipment we’ve already got, and with some careful ways of spending money to get improvements, we’ll get 3-4Mt extra with similar equipment,” Gerard said.


Glencore’s Togara North project in Queensland is not on the verge of going ahead despite a February announcement by the Queensland Government that the resolution of native title issues at Togara North would result in a $350 million mine and would generate 200 jobs.


Togara’s current landowner is challenging the government’s jurisdiction over the land and until this is resolved a lease will not be issued and Glencore will not progress work there. A pre-feasibility study has been completed at Togara North which suggests a 4-5Mtpa longwall operation could be viable. A full feasibility study, which may be carried out later this year, will assess infrastructure requirements for the project’s go-ahead, which include coal washing and rail facilities.


“Glencore takes a simple approach,” Gerard said. “We understand the resource really well, and put a lot of time into planning and looking at the risks. We make the decision to proceed based on clear financial objectives then set about putting the right people in place.


“When a mine’s having trouble they blame conditions. Well, all coal miners blame conditions. We view it differently. If we understand the conditions we’ll go there because we can manage the conditions.


“If we don’t believe we can manage them we won't go there.”

Originally published in the March 2001 edition of Australia's Longwalls.