Mining Queensland a costly job
QUEENSLAND is one of the most expensive places in the world to develop a new mining project, with falling coal prices delivering a double-whammy to resource companies.
Commonwealth Bank commodity analyst Lachlan Shaw gave the grim assessment less than a week after research from the Bureau of Resources Energy Economics found 101 mining projects were being considered by the Queensland Government.
"Queensland is, on a range of estimates, one of the most expensive if not the most expensive jurisdiction in which to build a new coal mine, rail and port capacity in the world," Mr Shaw told APN.
He said this only applied to new projects, not those already ticking over.
This is made worse by thermal and metal-making coal prices sliding downhill with thermal - or heating coal - now falling below $100 a tonne.
They are prices not seen since the second half of 2010.
Metal-making coal prices reached beyond $300 per tonne after the 2011 Queensland floods when less coal could make it to export but has been steadily falling.
As Queensland returns to form, Mongolia, Mozambique and China have muscled in and brought prices down.
Mr Shaw said it was bad news for not just the mine companies but the state and federal governments.
"Lower coal prices mean lower export receipts, income growth, miner profits and state government royalties although the lower Australian dollar provides a substantial offsetting when US dollars are converted into Australian currency," he said.
"Lower coal prices also call into question the viability of future coal projects."
BREE resource manager Alan Copeland said the hit to miners was significant but most plan years or even decades in advance.
"If you were looking at investing into a coal mine, you would be taking price movements into account," he said.
"I don't think anyone in the industry would have thought prices for coal would stay at $300 per tonne for a number of years."
A spokesman for Department of Mines said the government had no control over commercial decisions by mining companies, nor world coal prices, but was working to speed-up the approval process.
He said royalties were not necessarily affected simply by coal prices, with the government earning more from coal in the last financial year than the one before, as the industry produced less coal at a higher value.
A spokeswoman for BHP Billiton's Queensland coal arm BMA said having to pay more for funding, operations, taxes and more regulation were all considerations when commissioning a new project.