The long-term demand for coal from the Galilee Basin from India for power generation would ensure the future of the industry if it could succeed in keeping costs in the bottom two quartiles.

“Longwalls will be important as the Galilee mines go underground,” he told ILN.

“Initially they will start off as above ground, but as they progress they will need the latest in longwall technology.

“The nature of the Galilee Basin is the mines are built on economies of scale. They are so called ‘mega-mines’ with tonnages of 30 million tonnes.

“With that sort of volume they spread their fixed costs over more tonnes which bring unit costs down.”

Roche was responding to a report by Oxford University study that questioned the viability of developing coal mines such as GVK Hancock’s Alpha mine and Clive Palmer China First project.

The Rinehart-GVK joint venture's Alpha mine would require the coal price to be about $US90 per tonne ($100/t) for it to proceed, but up to $150/t for it to return money to its shareholders over its life.

Palmer’s China First mine would need $130/t to give an adequate investment return, the report said.

“Given the outlook of demand from China, this appears unlikely,” it said.

Roche said India, not China, was the major buyer of coal from the Galilee Basin.

“The Galilee Basin is very much backed by Indian interests that reflect the strong demand for coal-fired power in India,” he said.

“The Chinese demand is changing in nature. China is looking to source cleaner coal.

“But this is a market opportunity for Queensland, which has reserves of cleaner burning coal.

“The change in emphasis is a positive.”

Roche believes there will be continued demand from Asia for Queensland coal, which will underpin the scale and longevity of the Galilee Basin mines.

“The IEA [International Energy Agency] expects a lift for coal demand in the next couple of decades,” he said.