hypermax,I have been saying something similar for a long time...

hypermax,

I have been saying something similar for a long time here but only had 'gut feel' numbers so it's interesting to see your figures as they are pretty similar but even a bit higher than I was expecting.

I'm not sure the Bowen mines are necessarily good comparisons because they are generally high margin, low volume mines. The Galilee and EER mines would be low margin, high volume. So I have a feeling your mining and washing costs per ton would actually come down quite a lot for a 20Mtpa+ mine.

Also your strip ratio might be a bit high. Coal starts at 15m at the eastern margin. The overburden is also mostly going to be clay and sand - unconsolidated stuff, not drilling and blasting like the Bowen mines need. So easier, quicker and cheaper. It will certainly cut off shallow and the vast majority of that 2Bt JORC won't be economic.

If we take your figures there for Galilee coal, even the Galilee would struggle to turn a profit when you add royalty, capex (which is enormous) and carbon tax. Keep in mind too the Galilee strip ratios are much, much worse than EER's.

Yet we have at least three big mines going in there.

So clearly something doesn't add up. Here's another hypothetical cost scenario (allow me to take some liberties here just to illustrate the uncertainty).

Strip ratio 4:1 @ $3 = $12
Cost of mining t = $4
Cost of washing t = $5
Cost of rail 700km @ 4c/t = $32
Cost port & services = $10

Cost FOB = $63

Long term, NEWC goes to $120/t.
EER's discount to NEWC narrows to 70% = $84.

Margin is suddenly $19/t before royalties and taxes. Push through 20Mtpa and things look a bit different.

I'm not trying to say NEWC is going to $120/t long term, although it is feasible... just pointing out that the economics of a model like this are heavily dependent on small fluctuations in price and it's dangerous to make assumptions when you don't have all the data.

Personally I agree with you as I have stated here many times before... but I do recognise that I never thought the Galilee economics could work out either and they surprised me. And Galilee strip ratios are horrendous compared to EER - you're looking at 3m seams starting at 50m, or low quality 8m seams starting at 80m. Galilee coal is alright, but it's not THAT good.