Anglo American’s decision to quit plans for a coal-port expansion in Australia leaves Indian billionaires GV Krishna Reddy and Gautam Adani as the last major investors left looking at extending the terminal.
Anglo, the world’s fourth-biggest miner by market value, follows BHP Billiton and Rio Tinto Group in pulling out of Abbot Point in Queensland state.
GVK Group and Adani Enterprises are studying expansions at the port to export power station coal from separate mine projects they are planning inland in the Galilee Basin at a total cost of about $17bn.
Anglo’s move comes as thermal coal prices trade close to September’s four-year low amid a global supply glut swollen by increased output from major producers including Glencore Xstrata. GVK’s Mr Reddy, 76, has been in talks since 2011 to sell stakes in the $11bn project, while Mr Adani said in 2012 it had received approaches for minority stakes in its $6.4bn development designed to supply its power plants in India.
Anglo’s decision "further erodes confidence that the major mines being proposed in the Galilee basin can happen in the current price environment," said Matthew Trivett, a Brisbane-based analyst with Patersons Securities. "The ongoing weakness in the coal market makes it difficult for the returns to be adequate for the massive capital expense required to bring some of these peripheral basins like the Galilee into production."
London-based Anglo said last Thursday it had told the Queensland government of its withdrawal from the AP-X coal terminal development. The company said it was studying port options in the state, adding that its requirements would be determined by a range of factors, including the long-term coal market outlook.
Glencore Xstrata, the world’s biggest shipper of the fuel, last year halted work on the Balaclava Island export terminal also in Queensland, citing poor low coal prices, overcapacity and concerns about the medium-term outlook. Lend Lease Group, Australia’s biggest publicly traded property developer, last month said it wouldn’t take part in an expansion at Abbot Point after its mandate for the project lapsed.
Another major challenge for the mine proposals is the Galilee Basin’s 500km distance from the coast, requiring construction of a new rail road through Australia’s outback.
Source:- bdlive.co.za
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