Coal miner eyes Russia Wednesday, May 08, 2013 » 04:15pm While...

Coal miner eyes Russia
Wednesday, May 08, 2013 » 04:15pm

While most Australian coal companies struggle to keep their loss-making mines open, one of them can't wait to start operating.

Australian-listed Tigers Realm Coal is sitting on up to one billion tonnes and $60 billion of coking coal in Russia's remote eastern Siberia.

The sparsely populated region is set to challenge Australia's miners as it is closer to the world's biggest coking coal buyer China, which could have repercussions.

Coal mining giant, the BHP Billiton Mitsubishi Alliance (BMA) shut the Gregory mine in Queensland last year because it was costing it more per tonne to produce coal than the $US160 a tonne the price had sunk to - and it is not alone.

Tigers Realm says it can produce coking coal in Russia for less than $US100 a tonne, with lower labour and mining costs at virgin deposits with low strip ratios compared to the well-worn Queensland coal mines.

There is the small matter however of the junior with a market capitalisation of only $63 million needing $1.3 billion to get its Russian Amaam project online and producing up to 6.5 million tonnes a year, including building a port.

However chief executive Craig Parry told AAP he had no worries about getting the money.

It is a cheaper eight-day journey by sea from Russia's east to China - which is a net coking coal importer - compared to 13 days for Queensland's coal miners.

'We know China needs this quality coking coal (to make steel), we are that much closer to China than anywhere else, we're close to the coast and our operating costs are low.' said Mr Parry, who says he is confident in Asia's demand long-term.

'We'll get the money to do that, but we've got to have a sensible way to get there.'

The company needs about $500 million equity first and does not want to just get there by value diluting share issues, so that 'sensible way' will have to be growing the business slowly.

The beacon is the smaller, nearby Amaam North project it also has that it says will cost less than $100 million to build and be up, running and earning by 2015.

That would give it earnings and a track record of developing and operating a coal mine with the mainly Chinese investors it is courting.

'You don't come across that much coking coal too often these days, so Chinese groups particularly are showing interest,' Mr Parry said.

A jump in Chinese interest and investment in Russia, including in mining projects, could come at the expense of Australia.

The country is rated lowly by the World Bank but symbolically it was the first place China's new president Xi Jinping visited just a week after taking office in March.

'I think they realise now they've got this tremendously prospective part of the world in eastern Russia right on their doorstep,' Mr Parry said.

'We see ourselves right at the heart of that theme.'

http://bigpondnews.com/articles/Finance/2013/05/08/Coal_miner_eyes_Russia_870503.html