Xstrata deal boost for CQ
XSTRATA Coal’s reported deal with a Japanese electricity company provides a confidence boost for Central Queensland and the company’s planned billion-dollar expansion at Port Alma.
CQUniversity Professor in Regional Development Economics John Rolfe said southern media reports that Xstrata had settled 2010 thermal coal prices with Tokyo Electric Power at $95 a tonne was good news for Central Queensland’s coal industry and the region in general.
It’s reported the deal, which the company hasn’t confirmed and is expected to take effect from today, could see coal export income soar by $2 billion and become a benchmark price for Australian coal exports to Asian power generators.
“It’s good news specifically for Xstrata, but for Central Queensland as well,” Professor Rolfe said.
He said a lot of the proposed Galilee Basin projects, including Waratah Coal’s major new mine at Alpha, involved thermal coal.
And it’s a boost for Xstrata’s push for a billion-dollar expansion at Port Alma.
“This would bring Alpha another step closer,” Professor Rolfe said.
“Basically it puts a fair amount of confidence in the market.”
Queensland Treasurer Andrew Fraser said the coal industry was growing rapidly and on the verge of booming.
“Despite the recent economic downturn, it was actually Queensland’s coal industry which saw an increase in exports, as well as employment,” Mr Fraser said.
“And the good news doesn’t stop there, coal exports are predicted to double in the next few decades which means more jobs for industry and more growth for the region which will help boost Queensland’s economy.”
Asian utilities and thermal coal buyers from other markets, are tipped to buy 140 million tonnes from Australia in 2009-10, according to Australian Bureau of Agricultural and Resource Economics estimates.
With the Aussie dollar softening and demand for energy coal from Asia strengthening in the past few months, especially from China, the Xstrata deal sets the scene for a bumper start to 2010-11.