Maules Creek finally gets green light

THE federal government has finally approved Whitehaven Coal’s $767 million Maules Creek project – three years after it first applied – but the protracted delay means that the New South Wales mining group will have to pay $21 million for port access this year that it will not use.
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Lou Caruana

Under its take-or-pay contract with the Port of Newcastle the company paid the allocation for this year, but first production has now been pushed back to the second half of 2014.

But the approval is a relief for the company, which had to endure a conditional approval by former federal environmental minister Tony Burke in April, when details over government deliberations on the project were leaked.

This month at the eleventh hour, Burke moved out of the environment portfolio and was replaced by Mark Butler, leading to further uncertainty.

The controversial project, which has drawn concerted environmental protests – including a hoax ANZ press release stating that a loan for the project had been withdrawn – is not in the clear yet. There is still the possibility of a Land and Environment Court challenge similar to that mounted against Rio Tinto’s proposed Warkworth extension.

Throughout the Maules Creek three-year approval phase, Whitehaven’s project development team tried to build a comprehensive project delivery strategy, which was finally validated by all levels of government, managing director Paul Flynn said.

“The project has been through one of the most rigorous planning approvals processes ever undertaken by a mine in New South Wales and has been reviewed by a wide range of highly regarded environmental experts,” he said.

“The project is one of the most significant investments currently underway in regional NSW.

“We will be commencing construction imminently now that contracts can be executed.”

Whitehaven expects to employ 340 full-time equivalent employees and contractors in the construction phase, and approximately 470

during ongoing operations.

Of the $767 million capital costs, approximately $160 million has been spent to date, largely on CHPP and land purchases, leaving approximately $607 million to spend.

Whitehaven’s share of the capital costs will be funded by existing facilities and ongoing cashflow.

Initial site preparation, including fencing, storage and access roads, will start next week.

The most critical element of the construction phase is the rail spur and loop. The contract for the design and construction of the rail infrastructure is in the final stages of negotiation prior to execution.

Other material construction contracts are well progressed, according to Whitehaven.

The Maules Creek rail spur and loop comprises a common section of 7.9km to be shared with Boggabri Coal and 11.9km for the Maules Creek section.

The pre-mobilisation phase is underway and construction of the rail spur and loop is expected to start in August, with an approximate 12-month build time, post mobilisation. All other significant construction packages can be completed within the rail spur/loop timeline, Whitehaven said.

The CHPP is largely fabricated and is located close to the site.

Negotiations to finalise other related contracts, including power supply and bulk earthworks, are well advanced.

“Maules Creek is working closely with contractors to optimise the scopes of work to ensure that Whitehaven Coal can deliver the project in the most cost effective manner possible,” the company said.

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