Mining giant says king coal will not be subdued by gas

FEARS that coal is facing a threat from an emerging gas boom has done little to dampen the confidence of mining giant GVK in developing its $10.6 billion in projects west of Rockhampton.

The discovery and abundance of shale gas in the United States meant cheap energy supplies washed into the US market, making coal temporarily expensive by comparison, freeing up US coal reserves for export.

These shipments of coal were then competing directly with Australia's own exports from Queensland and New South Wales, the extra supply lowering already struggling coal prices.

Anglo American Australia chairman Graham Bradley told one newspaper these lower prices could come "at the expense of the next crop of new mines".

For GVK - which is developing the enormous Alpha and Kevin's Corner mines in the Galilee Basin through GVK Hancock Coal - its costs are designed to be low enough for it to turn a profit, even if prices tumble.

The two mines will be linked to a new terminal at the Port of Abbot Point near Bowen, connected by a 500km rail line to be developed by GVK and Aurizon.

Suggestions of prices falling from $115 per tonne to around $95, would mean GVK would still have lucrative deals if it can produce at its $55 per tonne target.

GVK boss Paul Mulder told APN even as more gas was pumped into the market, demand too was increasing.

He suggested as gas prices began to increase, coal remained a viable option.

"While (gas) will be used by Asian developing economies, coal is still very reliable," Mr Mulder said.

"When you're looking at cost, it is still the most reliable and cheapest as a base load."

Mr Mulder's reading is backed by the International Energy Agency's formal position on coal, that its use "has never stopped increasing and the forecasts indicate that, unless a dramatic policy action occurs, this trend will continue into the future".

GVK Hancock estimates up to 8000 jobs will be created as it develops Alpha, Kevin's Corner, the new terminal at Abbot Point and the 500km rail link.

Construction is due to begin on Alpha within 12 months, with first coal mines in 2017.



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