SOJITZ Coal Mining is an Australian subsidiary of Japanese company Sojitz and was established in 2002 as the holding company for its Queensland coal operations.

SCM’s span of operations has grown to three Queensland coal mines – Gregory, Minerva and Meteor Downs — and it has been quietly upgrading these.

Sojitz managing director and chief executive Cameron Vorias said the company’s plans to develop its Australian coal mines were progressing well despite some hiccups in thermal coal prices.

“Thermal coal prices have been stable but not brilliant,” Mr Vorias said.

He said Australian thermal coal prices experienced a difficult market in 2019, when benchmark Australian thermal coal prices endured a steady decline over 2019, falling to US$65/t free-on-board basis Newcastle at end of the year.

According to the Australian government’s Office of the Chief Economist’s latest quarterly report, lower prices for competitor power generation fuel liquified natural gas in Asia has undercut demand for Australian thermal coal.

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“Weak global demand placed downward pressure on the thermal coal prices in the first eight months of 2019; persistently low spot LNG prices encouraged some coal-to-gas switching – predominately in Europe – dampening demand for thermal coal imports,” it stated.

Seaborne prices for Newcastle, Australian thermal coal in the Asian market are expected to recover slightly to US$70/t FOB in 2020, according to accountancy firm KPMG in its January 2020 coal price forecast.

The forecast is based on submissions from market participants in Australia.

Minerva

Minerva thermal coal mine became Sojitz’s first coal mining operation after it purchased a 30pc stake in the mine in 1994 and it started production in 2005.

SCM raised its stake in Minerva to 45pc in 2006, and increased its stake to 96pc in 2010, after purchasing an additional 51pc equity interest in the joint venture from Australian coal producer Felix Resources.

Korean interests own the remaining 4pc equity interest in Minerva mine.

Minerva is an open-cut coal mine located 45km south of Emerald in Queensland that produces premium thermal coal and some pulverised coal injection coal that is used in steel production.

Minerva mine is relatively steady in terms of its production, Mr Vorias said.

Production at Minerva mine is running at a rate of 1.5mtpa, he said.

The mine exports its thermal and pulverised injection coal through Gladstone port to customers in Asia following a 400km rail journey.

Gregory and Crinum

Sojitz CEO Cameron Vorias.

SCM bought up BHP-Mitsubishi Alliance’s twin Gregory-Crinum operation in central Queensland in early 2019 for just $100m.

At the time of the deal’s announcement in 2018, Mr Vorias said in a statement the purchase aligned with Sojitz’s goal of operating a coking coal mine.

“Recommencement of mining operations at Gregory Crinum will deliver significant benefits to al our stakeholders in addition to ensuring security of supply of hard coking coal to our valued customers as well as providing jobs and strengthening the economy for the people in the region and the State of Queensland,” Mr Vorias said.

Sojitz has invested heavily in significant upgrade work for Gregory and Crinium.

The work was needed to restart the mines after their production was idled several years ago.

BMA had taken Gregory and Crinum offline in 2015 and 2016, respectively.

Gregory open-cut mine was recently reopened and to date has produced 200,000t of coking coal, Mr Vorias said.

“We have sold 200,000t from Gregory and plan to take production to 2.5mt in 2020.

“Then we are dependent on other plans to further increase volumes,” Mr Vorias said.

Crinum underground mine, a sister mine to Gregory, is next in line to restart production in late 2020, he said.

“Crinum mine is being brought on before the end of the year,” Mr Vorias said.

Production at Crinum is to change to a bord and pillar mining method under Sojitz, instead of the longwall method used by BMA.

Meteor Downs

SCM turned Meteor Downs South into a new producing thermal coal mine in 2018 with its 50:50 business partner U&D Mining.

Mr Vorias said the company was working to expand production at its Meteor Downs South thermal coal mine.

This development requires SCM to undertake some additional rail capacity.

“We are currently in the process of building a train load-out facility which should be ready in June,” Mr Vorias said.

Sojitz is planning to triple production at its Meteor Downs mine to about 1.5mtpa from 0.5mtpa currently, all of which is thermal coal.

Meteor Downs produces thermal coal with a relatively low ash content which does not require processing through a coal washery plant, Mr Vorias said.

Sojitz strategy

Sojitz is one of the few Japanese trading companies that is expanding its coal production in Australia after others have decided to limit their presence in the coal space.

Mitsui & Co, for example divested its 10pc interest in the Bengalla coal mine in New South Wales, saying it was no longer investing in thermal coal assets.

“For thermal coal, Mitsui has the corporate strategy to refrain from accumulating new assets while existing assets are under thorough review for divestiture purposes,” the company stated.

Another Japanese trading company, Itochu, also said it would not buy any more thermal coal mines after selling its stake in the Rolleston mine in Queensland.

“We recognise that, among other things, our coal-related businesses must be one of the issues which we have to promptly address as its impact on our business and our surrounding stakeholders will be significant, and we therefore hereby commit ourselves, as our policy, to neither develop any coal-fired power generation business not to acquire any new thermal coal mining interest,” the company said stated.

 

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