The Gunnedah Basin is located 330km northwest of Sydney and forms part of the 500km long, 150km wide Sydney-Gunnedah Basin. Current estimates by the NSW Department of Primary Industries put resources at nine billion tonnes of in situ coal.
The coal field is divided in two unequal portions by the Boggabri Ridge, with the eastern part made up of low ash, high energy thermal coal in the Maules Creek formation; and in the western portion both thermal and soft coking coal is present in the Hoskissons and Melvilles seams.
Regional exploration has identified substantial underground coal resources in the Narrabri and Caroona areas at depths of less than 300m. Much of the resource is suitable for underground mining, with only about 10% suitable for opencut, the Department of Primary Industries estimated.
A booming global coal market has revitalised the Australian coal industry and incited coal exploration and development across the eastern seaboard. This renewed interest hasn’t been more marked than in the Gunnedah Basin, where largely untapped coal resources are generating interest from international and local coal companies alike.
Strong interest in the basin has been evidenced by a lift in exploration licences and recently prompted the New South Wales Government to release the Caroona area for tender.
In August last year, the State Government called for expressions of interest from mining companies interested in developing coal deposits in the Gunnedah Basin. The successful applicant will be awarded coal exploration rights over the Caroona area, about 260km from the port of Newcastle, initially for five years.
Expressions of interest closed mid-December and the successful applicant is due to be announced by the end of February.
At present there is insufficient infrastructure and rail capacity to transport coal to the nearest port, so applicants had to consider infrastructure requirements as part of their expressions of interest.
A NSW Department of Primary Industries representative said factors restricting the development of the Gunnedah Basin were: the distance from the port, the cost of transport (Liverpool Range imposes constraints on coal haulage), limited resources suitable for opencut mining (when compared to the Hunter Valley) and the extensive alluvial plains.
Hill and Associates consultant Clyde Henderson believes that while rail distance from Gunnedah to the port of Newcastle is almost double that from the Hunter Valley, it is not insurmountable, especially when compared to some overseas operations.
“We have been quite spoiled as Australian coal mines are only a few hundred kilometres from the nearest port," Henderson said. "Compare that to Canada, for example, where you are looking at rail hauls to the coast of over 1000km. Russian coal companies have even further to travel – the distances are ludicrous, really – and some of China's thermal producing areas are well inland, so you would be looking at around 900km travel in some instances.
“One of the reasons Australia's coal industry has been so competitive is that we have all these great coal deposits close to the coast. Gunnedah might be a little further away, but by world standards it is not bad at all."
Henderson said basins like Gunnedah have become more popular than some more mature areas, where a lot of the best projects had already been developed. Gunnedah’s high quality thermal coals are also playing a big factor in its revival.
The NSW Department of Primary Industries currently has seven mine proposals on its books with total coal reserves of almost 1.3 billion tonnes. Listed projects include Belmont, Boggabri, East Boggabri, Maules Creek, Narrabri, Werris Creek and Whitehaven. (See planned projects table below).
The sole underground project under proposal comes from Narrabri Coal on a property 24km northwest of Boggabri. The proposal has been separated into two stages, with stage one extracting via a continuous miner operation and stage two targeting a resource to be mined through longwall mining. The approval process for stage one has commenced.
The Boggabri and Maules Creek projects were granted development consent some years ago. Tokyo-based Idemitsu, Boggabri’s project owner, has now decided to go ahead with the project with operations expected to commence during the second quarter of 2006. Idemitsu originally held 25% of the project in 1987 and increased its ownership to 100% in 1991.
Idemitsu will invest $A30 million in the opencut mine, which is expected to produce 1.5 million tonnes per annum. The operation is located 360km by rail from Newcastle Port.
The Boggabri lease holds 274Mt measured and 302Mt indicated resources of semi-soft coking coal and thermal coal that have low-ash, low-sulfur and high-calorie characteristics.
Idemitsu already has interests in Australia with shares in the Muswellbrook mine, NSW and Ensham mine, Queensland. With the addition of the Boggabri mine, it is estimated the company’s total production would extend to 12Mtpa by 2008.
Namoi Valley Coal’s Maules Creek project is 20km northeast of Boggabri and holds 160Mt measured and 520Mt indicated resources. The mine is expected to produce 6.5 million raw tonnes of thermal coal from dragline and truck and shovel methods.
The East Boggabri joint venture between Whitehaven Coal and Idemitsu lodged a development application in May last year for the East Boggabri mine. The property holds 12.34Mt proved reserves of thermal and semi-soft coking coal and will be mined by opencut methods.
Whitehaven has already proved its dedication to the Gunnedah Basin, commencing production at its Whitehaven mine in September 2000, replacing production from its Gunnedah colliery, which closed at the same time.
In January 2005 the company lodged a development application for extension to the mine, and approval of the Canyon extension was granted in June. The extension will extend the mine’s life until late 2008.
Whitehaven has also announced plans to develop the Belmont truck and shovel mine, 30km north of Gunnedah, to supplement production at the Whitehaven mine to the tune of 1-1.5Mt. The property holds 14.2Mt indicated resources and 10.8Mt probable reserves.
The coal will be transported 30km by road to the Gunnedah Rail Facility before being railed to Newcastle Port for export to Asian customers. The development proposal for this mine will be lodged this year.
A mining lease was granted for the Werris Creek project in March last year. The opencut mine, a joint venture between Creek Resources and Betalpha, commenced production mid last year. The property holds 9.8Mt ROM reserves and will produce 1.5Mtpa of thermal coal.