Carborough Downs yet to ramp up

VALE Australia’s Carborough Downs longwall mine is limping along and well short of its target of 4 million tonnes per annum. But the Brazilian mining giant is patient and praised the mine’s best-ever quarterly performance of 289,000 tonnes.
Carborough Downs yet to ramp up Carborough Downs yet to ramp up Carborough Downs yet to ramp up Carborough Downs yet to ramp up Carborough Downs yet to ramp up

Carborough Downs, image courtesy of Vale.

Blair Price

This metallurgical coal output for the September quarter was a 4% or 12,000t improvement from the previous quarter and was not a big gain from the 127,000t produced in the corresponding period last year when the longwall was first commissioned.

The mining area is known to host geotechnical challenges and Carborough Downs had to make two longwall moves on its first block.

For the first nine months of 2010 the mine produced 850,000t of metallurgical coal.

Despite the slow production progress, Vale was upbeat.

“Production rates of the longwall have improved over the last quarter and are being achieved on a far more consistent basis, which allowed CD to achieve its best performance ever,” the big Brazilian miner said.

While the development of the new longwall mine in Queensland was estimated to cost about $US330 million, Vale’s existing Integra open cut and underground operations outgunned Carborough Downs in the recent quarter.

The Integra operations in the Hunter Valley of New South Wales produced 296,000t of met coal – a 21% gain from the previous quarter but also a 35% fall from a year ago.

The Integra mines are also in front of Carborough Downs for the year, with 870,000t of met coal produced at the Hunter Valley operation for the first nine months of 2010.

Including the met coal production from its operational “others”, which would presumably be from its 50% stake in the Isaac Plains mine in Queensland it shares with Aquila Resources, Vale said its total group met coal production reached 814,000t for the September quarter.

Production from Integra and the El Hatillo mine in Colombia, plus Isaac Plains gave Vale 1.1Mt of thermal coal for the recent quarter.

Vale noted the total coal production of 1.9Mt was an “all-time” quarterly high.

The El Hatillo mine was the star performer for Vale, with 830,000t of output for the September quarter and up 164% year on year.

Three weeks ago, Construction Forestry Mining and Energy Union district president Stephen Smyth told ILN Carborough Downs was experiencing a high turnover of important staff.

“They have people leaving,” he said.

“Just a series of people since the mine has been going, but over the last few months they have had a new manager come in, a new senior site executive, a new training officer, mainly the core positions at a minesite are the positions that people are leaving.”

The Brazilian miner is locked in legal disputes with Aquila over the Eagle Downs and Belvedere longwall projects in Queensland.

Aquila is seeking damages from Vale for the expected income from longwall mining at Eagle Downs from 2013, after Vale unexpectedly pulled out of arrangements to secure port capacity at Abbot Point in January.

At Belvedere, both joint venture parties are in dispute over the fair market valuation process for Aquila’s 24.5% stake in the project.

Vale seeks to pay a price of around $US92 million to Aquila, while the Perth-based company is seeking a far bigger price.

Mine Life senior resources analyst Gavin Wendt believes it could be reasonable to expect a higher price than $92 million for Aquila’s share of the Belvedere longwall project.

He is curious to know why AMCI sold its 24.5% stake in the project for this amount earlier in the year.