Australian coal producer TerraCom (ASX: TER) said on Monday it had extended the life of its Blair Athol coal mine in Queensland’s Bowen Basin by about 10 years, following a reserves update.
As of June 30, 2021, the mine’s marketable reserves totalled 19.5 tonnes, TerraComm said. Based on a two-million-tonne sales profile, the company estimates that Blair Athol will run for another decade, giving the mine 14 years of operation under its ownership.
TerraCom acquired Blair Athol in 2016 from Rio Tinto for only A$1 (about 72 US cents at today’s rates), at a time when coal prices were hitting historic lows and top miners decided to offload their coal assets.
Life extension of central Queensland’s coal mine follows a reserves update that added 19.5 tonnes.
The company, which reopened the mine the following year, was forced to defend the authenticity of the operation’s coal in April, denying allegations that it was involved in a coal sampling probe.
The investigation and subsequent 2020 court case centred on allegations that lab testing, and certification company ALS had helped TerraCom to falsify its coal quality results to increase the output’s worth.
Blair Athol’s life extension comes amid soaring thermal coal prices and record-low asset values, which is creating a complex situation for Australian coal producers.
It also follows recent announcements by the biggest banks in Australia, the world’s biggest coal exporter, committing to phase out exposure to thermal coal by 2030.
Some producers, including BHP, are mulling their exit from the market. Others such as China’s Yancoal, Australia’s top independent exporter of thermal coal, have chosen to keep production rates and focus on coal quality.
TerraCom has opted for extending the mine life through low-cost planning and productivity improvements.
Blair Athol generates 3 million tonnes of high-quality thermal coal a year for exports into Asian markets.