We would love control: Vale

VALE Australia’s Steve Badenhorst has reportedly said the company would “love to have control” of the Isaac Plains and Eagle Downs coal assets it currently shares with Aquila Resources. Meanwhile, the Brazilian miner is touting a plan to build a coal export terminal at Abbot Point.
We would love control: Vale We would love control: Vale We would love control: Vale We would love control: Vale We would love control: Vale

Aquila's Isaac Plains mine.

Blair Price

An ex-BHP Billiton Mitsubishi Alliance general manager of the Blackwater and

Gregory Crinum operations, Badenhorst has been chief operating officer at Vale’s Australian coal arm for almost a year.

At a conference in Sydney yesterday, Badenhorst said Vale planned to build one of the four new export terminals that would be part of the $A6.2 billion expansion of Abbot Point in Queensland, according to Bloomberg.

The North Queensland Bulk Ports Corporation website says the deadline for expressions of interest is July 1.

Vale has previous indicated that its Degulla project in the Galilee Basin could target production of 20-40 million tonnes per annum, and a terminal at Abbot Point would make this project more possible.

Badenhorst further revealed that Vale’s Australian coal output could be less than its target of 8 million tonnes this year because of flooding and the shipping dispute with Aquila at Isaac Plains, according to Reuters.

However, the Carborough Downs longwall mine near Moranbah had output of 231,000t in the March quarter due to adverse geotechnical conditions – an annualised rate of 0.92Mt and well under Vale’s objective of hitting the mine’s nominal capacity of 4.8Mtpa this calendar year.

Badenhorst also reportedly made reference to the JV dispute with Aquila over the Eagle Downs longwall project and with the marketing disagreement at the Isaac Plains mine.

“We would love to have control of these assets,” Badenhorst said, according to Reuters.

“However, this isn’t part of our discussions right now. We need to find a legal framework.”

Badenhorst’s comment follows Aquila’s suspicions that Vale has an agenda against Aquila.

“In this current strong coal environment, Vale’s agenda is not good for Queensland, it is not good for Vale’s reputation and it is not good for Aquila’s shareholders,” Aquila executive chairman Tony Poli recently said.

“We should get on with developing coal in Queensland for the benefit of all stakeholders.”

In reference to the dispute at Isaac Plains, Vale global coal managing director Decio Amaral recently told ILN “it would be an error to attempt to draw conclusions about either parties' broader commercial aspirations from their approach to this particular joint venture”

With three cancelled shipments so far, Aquila expects the stockpiles at the Isaac Plains mine to reach full capacity in early July.

Badenhorst said Vale was prepared to expand the capacity to stockpile coal if necessary, according to Reuters.

Macquarie Private Wealth has maintained a neutral recommendation on Aquila, even though the situation at Isaac Plains impacts the company’s cashflow.

The broker also maintained a target price of $10.40 for Aquila shares due to its exposure to tight coking coal and iron ore markets.

“We acknowledge Aquila is trading significantly below our valuation,” MPW said in a report yesterday.

“However, we flag Aquila’s significant funding and execution challenges in bringing its projects on stream.

“These challenges are compounded by an increasingly difficult relationship with its coal JV partner.”

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