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Xstrata backs Wiggins Island expansion
The Australian
June 29, 2012 12:00AM

SWISS miner Xstrata has agreed to a $110 million pre-commitment for an expansion of the $2.5 billion Wiggins Island Coal Export Terminal at Gladstone, boosting the chances that the expanded port and the associated $1bn Surat Basin rail project will begin exporting by 2016, The Australian's Matt Chambers reports.

Yesterday the coalminer-owned WICET confirmed a report earlier in the week in The Australian that Xstrata, Stanmore Coal, Cockatoo Coal and Aquila Resources had been chosen to export through the planned terminal. The four signed capacity commitment deeds this week, WICET said.

The signing, which had been delayed by a week, came amid analyst speculation that Xstrata would not be willing to pay the $110m for early works at the port because it was not certain it would go ahead with its $6bn Wandoan coalmine. This would mean the Surat Basin rail and opening of the region around Wandoan was in doubt.

The second stage will have the capacity to export 32.2 million tonnes of coal a year, with Xstrata signing up for 22 million tonnes of that for Wandoan, which is in the Surat Basin.

While the signing is far from a guarantee the mines and rail will go ahead, it shows Xstrata is still trying to shore up Wandoan, despite cost pressures and sliding coal prices. Stanmore Coal was allocated five million tonnes a year for its The Range mine, Cockatoo 4.2 million tonnes for its Collingwood mine and Aquila one million tonnes for its Washpool mine.

Stanmore shares rose 2.5c, or 7 per cent, to 38.5c, helped by a $36m placement of shares and convertible notes at 67.5c a share that will give Hong Kong's Sprint Capital a 19.99 per cent stake in the miner.

Based on Xstrata's share of the early funding, Stanmore will be up for $25m, Cockatoo about $20m and Aquila $5m.

"WICET is progressing engineering, early works and working with the four producers and the associated infrastructure providers to plan and align financing of the project," WICET said.

The first, $2.5bn stage of the terminal is under construction and targeting export capacity of 27 million tonnes a year in 2014.