Waste not, want not – Queensland gas company looks to profit...

Waste not, want not – Queensland gas company looks to profit fromsafeguard mechanism

In rural Queensland, some 100KMnorthwest of Brisbane, four gas flaring cylinders are busy burning the methanegas produced from one of Australia’s coal rich regions.

Flaring the gas — used to ensurecoal can be mined safely — will,however, soon cost the mininggiants which call the region home tens of millions of dollars as thesafeguard mechanism kicks in.

For Queensland Metals (QPM), thesituation offers a lucrative opportunity to secure the gas that would otherwisebe flared and instead pipe the gas to eventually produce electricity — muchneeded as Australia struggles to dig new sources of gas and build enoughfirming capacity to mitigate the impact of coal power stations retiring, saidDavid Wrench, chief executive officer of QPM Energy, the subsidiary of thelisted company.

“We think of ourselves asabating the gasthat would otherwise be wasted. These underground mines areabout to be hit hard by the safeguard mechanism — due to the change in the waybaselines are calculated — and that provides the impetus for their waste gas tobe connected to our system,” Mr Wrench said.

“It’s a win-win. The coal minersget rid of their gas and QPM Energy gets a reliable gas supply.”

QueenslandPacific Metals' projects across the state.

DavidWrench, QPM Energy chief executive.

Under the Safeguard Mechanism,Australia’s 215 largest emitters that together cause 28 per cent of thecountry’s emissions must decarbonise their operations or offset their emissionsby purchasing carbon credits.

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The scheme is the centrepiece ofthe Labor government plan to reduce emissions by 43 per cent by 2030 and reachnet-zero emissions by 2050.

But fears are mounting about theimpact of the scheme on major emitters who argue they will be placed at acompetitive disadvantage to international peers, and QPM are hoping to profit.

QPM acquired 100 per cent of theMoranbah gas project from the consortium of Arrow Energy and AGL Energy,promising to increase gas output by more than a third from the present 10 PJ ayear.

QPM has agreements to take gasfrom global giant Anglo American and local company Fitzroy, while it is chasingagreements from other heavyweights in the regions — including the US-based coalproducer Peabody Energy — in the quest to grow its business and feed gas north.

“QPME has the capacity to usethe gas fired Townsville Power Station to generate electricity during the peakperiods, which can be lucrative for us and helps ease pressures in the electricitymarket,” Mr Wrench said.

QPM could, however, shiftstrategies and divert gas to QPM’s proposed battery materials refinery nearTownsville. The project, which is targeting FID next year, would processimported, high-grade laterite ore from New Caledonia to produce nickel sulfateand cobalt sulfate.

QPM hasagreements to take gas from global giant Anglo American and local companyFitzroy. Picture: Supplied

The facility, dubbed the TECHProject, requires 13TJ of gas, which aims to tap into the soaring demand forEVs.

Even if the ambitious TECHProject does not materialise, QPM hopes to profit from the safeguard mechanism— providing a template in how the coal industry can coincide with the safeguardmechanism.

Queensland — which isAustralia’s most coal dependent state — has dangled more than $500m to coalproducers to help them manage the national quest to curtail emissions.

The assistance package, which isseen as a olive branch by the state Labor government after it drasticallyraised coal royalties, could see coal companies apply for funding to transportto aggregators such as QPM.

“QPME is ideally positioned to participatein the Low Emissions Investment Partnership, a $520m program launched by theQueensland government to fast-track carbon emission reductions with a focus onthe steel making coal industry. The program is aimed at capitalising oncollaborative opportunities, with partnerships through bilateral agreements andco-investment in established emission reduction strategies,” Mr Wrench said.

COLIN PACKHAM

BUSINESS REPORTER