Australia's Whitehaven clears hurdle to coal project

Wed Oct 24, 2012 11:39pm EDT
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By Sonali Paul

MELBOURNE (Reuters) - Whitehaven Coal (WHC.AX: Quote) has won state approval to develop its most valuable project, the A$651 million ($673 million) Maules Creek mine, and now just needs federal clearance, Australia's largest independent coal miner said on Thursday.

Whitehaven aims to start operations at the mine in mid-2013, ramping up to produce more than 10 million metric tons (11 million tons) a year of mostly high quality semi-soft coking coal, used to make steel, from fiscal 2016.

The approval relieves some pressure on Whitehaven, whose shares have plunged 43 percent from a high of A$5.62 this year due to a coal price slump, worries about delays at Maules Creek and fears its top shareholder may be forced to dump his stake.

"Notwithstanding the stringent environmental conditions which have been placed on the project and the difficult coal market at present, this is a world-class project and Whitehaven will be seeking to bring it into production as soon as possible," Managing Director Tony Haggarty said in a statement.

His comments came the same day that a newspaper reported that he wants to leave the company.

Whitehaven declined to comment on the report in the Australian Financial Review that said Haggarty had told the board of his intentions earlier this year and the board had started its search two months ago.

The approval also comes on the same day that Whitehaven announced that it plans to suspend operations at its Sunnyside mine indefinitely due to continuing declines in global coal prices, joining other producers who have made production cuts and delayed projects, including BHP Billiton (BHP.AX: Quote), Rio Tinto (RIO.AX: Quote) and Xstrata XTA.L.

Whitehaven will offset the lost production from Sunnyside by ramping up operations at its Werris Creek mine from 2 to 2.5 million metric tons per year. The company will also offer Sunnyside mine employees posts at other Whitehaven operations, it said.   Continued...