Sydney, 20 May (Argus) — UK-Australian resources company BHP Billiton is keeping its options open for the 14mn t/yr Red Hill hard coking coal mine in Queensland, with it applying for environmental approvals despite officially halting evaluation work on the project in September.
BHP Billiton stopped all work on the large Red Hill mine as part of its strategy to focus on developing mines already under construction and lower operating costs at existing mines in an effort to offset a squeeze on profit margins caused by the slide in coking coal prices.
The company included Red Hill as part of new mining lease application last week in a submission to the Australian environment department. But it warned that the speed of development of the mine, as well as its ultimate scale, is still subject to capital investment approvals by the project owners.
Red Hill is part of the BMA joint venture between BHP Billiton and Japanese trading house Mitsubishi. It was one of 14 potential projects that BMA planned to develop over the next 10 years. The underground mine, located adjacent to BMA's 6mn t/yr Goonyella Riverside coking coal mine, had been expected to start construction in 2013 and take about 30 months to build.
The project has a design capacity of 14mn t/yr over 20-25 years, making it far bigger than any of the coking coal mines the company operates or has under construction.
The new submission includes Red Hill in a wider project that also covers an application to extend the life of the Goonyella Riverside mine.
BHP Billiton has said it will focus on returning capital to shareholders rather than risk overinvesting in growth, meaning projects such as Red Hill will have to be more economically robust to gain approval. It will also focus on its core products, including coking coal and iron ore.
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