tasmania energy resource article

BACKWATER yesterday, energy frontier today – how the booming coal and fuel prices have got them flocking to the Apple Isle. The Outcrop by Robin Bromby

Coal was discovered in Tasmania in 1833, at a place called Plunkett Point. Until then, the colony’s fuel needs had been shipped from New South Wales.

The vessel Kangaroo carried the first load of coal to Hobart on June 5, 1834, although it was of poor quality.

The householders and public servants who burned the coal in houses or government offices complained about using it.

The mine was closed in 1848 due to the losses made and the problems of disciplining the convict workforce, although it was operated by private interests for a while thereafter.

Further coal discoveries were made and a railway built to St Marys in the Fingal Valley by 1886 enabled the development of Tasmania’s coal mining industry.

Fast-forward to 2008 and the remaining remnant of the industry is the Cornwall Coal Company, based at Fingal, which mines black coal there and at St Marys.

The output – 433,600 tonnes in 2006 – is put through the company’s washery and then carted by rail to the mining company’s main customers, Cement Australia at Railton and the Norske Skog newsprint mill at Boyer.

Over the decades, however, mining in Tasmania has tended to focus on a narrow range of minerals. Zinifex’s recent discovery on the island was of a deposit dominated by lead and zinc.

Tin and gold have been the other mainstays. Allegiance Mining was one company that broke out of this comfort zone, bringing into production Tasmania’s new nickel mine at Avebury.

But now the island is a hot spot for energy projects.

As reported last week, Spitfire Resources – which listed last December as a manganese play – diversified into coal by picking up four coal projects in Tasmania.

This should not have come as a surprise; the company’s biggest shareholder, AIM-listed Churchill Mining, is involved in coal exploration in Indonesia and has the expertise to help Spitfire.

Spitfire, as has been reported, plans to focus on the advanced Langloh project (next door to Cornwall’s mine) and will be looking to export 1-2 million tonnes a year of thermal coal.

The nearest rail line is only 15km from the proposed mine and offers cheap transport to the wharves at Hobart – or it can rail the coal to Burnie or Bell Bay.

Drilling back in the early 1980s delineated three coal seams. The other three projects have all had some work on them and coal indications are clearly promising.

This week Comdek announced it had picked up two coal projects in Tasmania’s Midland Valley – Jericho East and Jericho West – which are near an existing railway line (described as under-utilised).

The company seems confident there is at least 60-80Mt of thermal coal – and hopes it may be able to prove up as much as 300Mt.

This is on top of the Woodbury project acquired by Comdek earlier in the year, and which sits astride the state’s main north-south rail corridor. There the target is up to 160Mt of thermal coal.
It is extraordinary that Tasmania’s new coal initiative has occurred in a period of just four months. And we must expect there is more to come.

These coal deposits have been known about for years. Comdek’s properties were previously owned by BHP Coal. In the case of Spitfire, its Avoca project was deemed a potential coking coal resource by Western Mining.

So you can bet that these companies, along with others, are combing through Tasmania’s mining data to look for other “forgotten” coal targets that have suddenly become attractive at today’s prices.

It is not just coal, of course, that is propelling the search for energy resources in Tasmania. The hunt is on for geothermal potential.

Just this week Kuth Energy was granted an exploration licence over 1538 square kilometres on the island’s mid-east coast region.

And then there is Boss Energy, which has already completed bulk sampling from an oil shale project near Railton.

While many bemoan the soaring commodity prices and their impact on costs of living, Tasmania may be quietly celebrating such developments. Without them, the state would not be on the verge of becoming an energy player outside hydro dams.