Offshore coal deal appeals to BHP in face of RSPT Matt Chambers From: The Australian May 29, 2010 12:00AM BHP Billiton has restarted studies on a 6 million tonne-a-year Indonesian coking coal hub, which chief executive Marius Kloppers has said could leapfrog multi-billion-dollar Queensland coking coal expansions if Kevin Rudd's 40 per cent tax on mining profits is implemented.
The moves come as Itochu, one of BHP's Japanese partners in its iron ore ventures, said signs of the tax slowing BHP's coking coal expansions were starting to emerge.
Yesterday, BHP said the $US350 million ($409m) sale of a 25 per cent stake in the Murawai coal project (whose development was shelved last year) to Indonesian coal company Adaro Energy had been approved by the Indonesian government.
"We're now progressing study work to identify development options," BHP metallurgical coal president Hubie Van Dalsen said.
In June last year, BHP abandoned a trial mine at Murawai (now called Indomet Coal) and stopped a feasibility study on the broader hub. Studies have now been restarted on the best way to mine seven coal prospects on the island of Kalimantan.
Last week, Mr Kloppers said the Rudd government tax could make the Indonesian coal project more appealing to the company than some expansions in Queensland's Bowen Basin. While BHP had signed the sale deal in late March (a month before the announcement of the resource super-profits tax proposal), the company did not miss the opportunity to link the project to the tax. "There are a range of factors that influence BHP's investment decisions, a stable and competitive tax regime is a key factor," a spokeswoman said when asked if the RSPT was spurring work on the project.
Yesterday, Itochu energy, metals and minerals president, Yoichi Kobayashi, told Japan Metal Bulletin the company had been urging its partner, BHP, to accelerate coking coal expansion plans. "If the resources tax is introduced, there could be major impacts such as expansion plans being postponed," Mr Kobayashi said. "Signs of such impacts are already starting to emerge."
BHP would not confirm the size or timing of the Indonesian mine, but recent reports out of Indonesia have quoted company officials there talking about mining 6 million tonnes a year of coking coal from 2014.
The prospects are in central and east Kalimantan in a remote region with no infrastructure.
To mine the area, BHP plans a 131km truck corridor from its Lambunut prospect to the Mahakam River, where a coal barge port would be built to transport coal 430km downstream to be loaded on ships for export.
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