chinese t/o & bfs, page-52

Legume,

There are something like 260Mt of reserves already in the Surat projects. They are planning to mine 12Mtpa from three mines.

If they get $80 instead of $100+, that is still a $30 premium on what Surat miners were used to in the early 2000s.

$30 premium on 12Mtpa is an extra $360M revenue PER YEAR. In 10 years that's an extra $3.6B undiscounted, and the mine life is in excess of 20 years.

Opex blowouts are the biggest risk here in terms of viability IMO. The deposits and the throughput are both big enough that they should be able to cover any reasonable capex blowouts as long as they can keep their margins reasonable. Capex payback is determined by the life of mine and these are big mines with long mine lives. Not Galilee scale but then they don't need to be. Galilee mines are only viable at 40 or 60Mtpa. They are very marginal.

The Surat mines aren't marginal (Wilkie Creek is a 1Mtpa mine that was operating for years at rock-bottom coal prices), they are just mostly stranded currently except for a couple of lucky ones which have limited rail capacity to Brisbane (namely Wilkie and Acland). They have similar coal quality (slightly lower) than Galilee but they are thicker seams and much, much shallower.

The problem with capex is going to be securing that money in the first place, not paying it back over 20+ years.

All just IMO.