Australian LV Coal Producers:

Proven performance, but where to next?

Ross Stainlay
General Manager Marketing
J ellinbah Resources
CoalTrans World Anthracite & PCI Conference, September 2004, Hanoi
J e l l i nb ah Res o ur c e s
Outline
Mines
Location
Production
Quality
Infrastructure
Port, Rail
End Use
PCI and other uses
Future Projections
Mines
1.6 Mt Export Sales
2003/2004
Gladstone Port
Blackwater Rail System
Yarrabee Coal
Company
Mine Operator
YARRABEE Mine Name
4.0 Mt Export Sales
2003/2004
Gladstone Port
Blackwater Rail System
J ellinbah
Resources
Mine Operator
JELLINBAH Mine Name
1.9 Mt Export Sales
2003/2004
Dalrymple Bay Port
Goonyella Rail System
FoxleighMining Mine Operator
FOXLEIGH Mine Name
5.2 Mt Export Sales
2003/2004
Dalrymple Bay Port
Goonyella Rail System
Australian Premium
Coals
Mine Operator
COPPABELLA /
MOORVALE
Mine Name
3.7 Mt Export Sales
2003/2004
Hay Point Port
Goonyella Rail System
BMA Mine Operator
SOUTH WALKER
CREEK
Mine Name
Queensland LV Coal Producers
Total Reserves
Measured 363 Mt
Queensland LV Coal Exports
0
2
4
6
8
10
12
14
16
18
1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04
Austral i an Fi scal Year (endi ng 30 June)
Mt
Moorval e
Foxl ei gh
Coppabel l a
South Wal ker Creek
Yarrabee
Jel l i nbah
Source: Department of Natural Resources & Mines - Qld Coal Industry Reviews
0
5
10
15
20
25
Source: Department of Natural Resources & Mines, 2003 Australian Black Coal Statistics
Queensland Coal Mines Strip Ratio
Strip Ratio (bcm / product tonne)
LV Coal is shown in red
LV Coals from Queensland
0.40
0.45
0.50
0.55
0.60
0.65
0.70
9 10 11 12 13 14 15 16 17
VM % (ad)
TS % (ad)
Jel l i nbah
Coppabel l a
Sout h Wal ker Creek
Foxl ei gh
Yarrabee
Moorval e
Area is proportional to tonnes
Queensland Rangal Coals
PCI / Thermal Fraction CPP Flowsheet
DMC
(Secondary)
DMC
(Primary)
FINES
CIRCUIT
FINES
CIRCUIT
REJECT PCI /
THERMAL
COKING
COAL
Coarse
Intermediate
Fines
Slimes
FEED SIZE
PROCESS
* DMC =dense medium cyclone
F
S
S
F
Infrastructure
QR* Coal Railings (*formerl y Queensland Rail)
50
70
90
110
130
150
1
9
9
0
/
9
1
1
9
9
1
/
9
2
1
9
9
2
/
9
3
1
9
9
3
/
9
4
1
9
9
4
/
9
5
1
9
9
5
/
9
6
1
9
9
6
/
9
7
1
9
9
7
/
9
8
1
9
9
8
/
9
9
1
9
9
9
/
0
0
2
0
0
0
/
0
1
2
0
0
1
/
0
2
2
0
0
2
/
0
3
2
0
0
3
/
0
4
Mt
Source: QR
QR Rail Snapshot
250 locomotives
5 500 coal wagons
Average 470 services a week
Train Sizes up to 10 000 t
Average 7 000 t
Queensland Coal Exports by Port
(2003/04 Provisional Figures)
Gladstone
Brisbane
Abbot Point
Dalrymple Bay
Hay Point
LV Coal
Other
3 Mt
42 Mt
34 Mt
44 Mt
12 Mt
Source: Barlow J onker Aug 04
CQPA Port of Gladstone - Coal Exports
0
5
10
15
20
25
30
35
40
45
1999/00 2000/01 2001/02 2002/03 2003/04
Mt
Barney Poi nt
RGTCT Non-
bl ended
RGTCT
Bl ended
1993/94 exports
= 18 Mt approx
Source: Central Queensland Ports Authority
Hay Point Coal Terminal Throughput
0
5
10
15
20
25
30
35
40
1999/00 2000/01 2001/02 2002/03 2003/04
Mt
Provisi onal
Source: Barlow J onker Aug 04
Dalrymple Bay Coal Terminal
- Historic and Projected Capacity
0
10
20
30
40
50
60
70
80
90
100
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Aust ralian Fiscal Year (ending 30 June)
Mtpa
Actual Throughput
Net Operati onal Capaci ty
Hi gh Case proj ecti ons
Low Case proj ecti ons
Source: Prime Infrastructure
Projected
Expansion
Stage 1
2
3
4
5
6
High
Low
Utilisation of Port Capacity - 2003
97 %
91 %
81 %
0
10
20
30
40
50
60
Dal rympl e Bay Gl adstone Hay Poi nt
Mt
Export s (Mt) Capaci ty (Mt)
Source: Barlow J onker Aug 04
Queensland Coal Industry
- Working Days Lost per 1000 Employees
0
1000
2000
3000
4000
5000
6000
7000
8000
1996 1997 1998 1999 2000 2001 2002 2003
Cal endar Year
No. of Days
Source: Australian Bureau of Statistics
End Use
Pulverized Coal Injection into Blast Furnaces
Coke
PCI
Coal
Coke Ovens Blast Furnace
Coal Grinding and
Injection System
Courtesy of BMH
Typical PCI Installation
Raw Coal
Blast Furnace L
10 000 t HM / d
Natural
Gas
Nitrogen
Booster Compressors
2000 t
Inj ection Station
2 x 19
834 t
2 x 42 t/h
2 x 42 t/h
Pulveri zers
Source: Claudius Peters Technologies GmbH
0
10
20
30
40
50
60
70
Europe Japan Brazi l * Chi na * Indi a
No of BFs
Operat i ng BF PCI Fi t ted
* China have another 130 furnaces between 200 and 1000 m
3.
Brazil excludes charcoal BFs
PCI Coverage by Region & Average Injection Rates
(furnaces larger than 1000 m
3
)
155
Average PCI Rate
kg/tHM
125
135
125
130
0
5
10
15
20
25
30
35
40
45
97 98 99 00 01 02 03 04
F
05
F
06
F
07
F
08
F
09
F
10
F
Mt
Other
Canada
Venezuel a
Indonesi a
RSA
Austral i a:
Other
Austral i a: Low
Vol
PCI Coal Exports by Origin
F =Forecast
Source: Barlow J onker Aug 04
Vietnam included
in Other
Coddington Intl
Hill & Associates
Queensland LV Coal - Exports by Region
0
2
4
6
8
10
12
14
16
18
1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04
Austral i an Fi scal Years (endi ng 30 June)
Mt
Other
Ameri cas
EU15
Asi a
Source: Department of Natural Resources & Mines - Qld Coal Industry Reviews
0
5
10
15
20
25
30
35
40
1997 1998 1999 2000 2001 2002 2003 2004
F
2005
F
2006
F
2007
F
2008
F
2009
F
2010
F
Mt
Other
Ameri cas
EU15
Asi a
Demand for Imported PCI Coal
Source: Barlow J onker Aug 04
F =Forecast
75 80 85 90
Carbon (%daf)
0.2
0.4
0.6
0.8
1.0
R
e
p
l
a
c
e
m
e
n
t

R
a
t
i
o
European correlation (Brouwer & Toxopeus, 1991)*
Other European correlation (1999)*
J apanese correlation (Ishii, 2000)*
Modelling 1 (Hutny and others, 1990)**
Modelling 2 (Fukushima, 2000)**
* Actual blast furnace performance
** Theoretical computer model
Replacement Ratio
(RR = kg of coke repl aced for each kg of coal injected)
LV Coals
The LV Advantage (4 Mtpa HM)
High Vol PCI
Coking Coal 509 kg/tHM @ $US50/t
Yields 386 kg/tHM Coke
PCI 150 kg/tHM
RR 0.76 & $US40/t
Coal Cost = US$31.45 /tHM
= US$126 million pa
Savings US$ 6 million pa
Coking Coal 479 kg/tHM @ $US50/t
Yields 362 kg/tHM Coke
PCI 150 kg/tHM
RR 0.92 & $US40/t
Coal Cost = US$29.95 /tHM
= US$120 million pa
Savings US$ 12 million pa
LV PCI
All coal prices FOB basis coke blend of HCC & SSCC coals
Excludes value of by-products, coke oven gas and coke breeze
Coking Coal 662 kg/tHM @ $US50/t
Yields 500 kg/tHM Coke
Coal Cost = US$33.10 /tHM
= US$132 million pa
No PCI
Coal prices are for comparison purposes only.
RR = coke replacement ratio
Low Vol PCI Coal High Vol PCI Coal
Low VM Coal
High VM Coal
Hot Blast:
Equal or
Slightl y Higher
Hot Blast:
Equal or
Slightl y Lower
O
2
Rate:
Equal or
Lower
O
2
Rate:
Equal or
Higher
Permeability:
Equal or
Slightly Lower
Permeability:
Equal or
Slightly Higher
Gas Reduction:
Lower
Gas Reduction:
Higher
RAFT: Higher
RAFT: Lower
Combustion
Efficiency: Lower
Combustion
Efficiency: Higher
Fuel Rati o: Lower
Coke Rati o: Lower
Fuel Rati o: Higher
Coke Rati o: Higher
Top Gas Vol.: Lower
Calorific Value: Lower
Top Gas Vol.: Higher
Calorific Value: Higher
Dust : Equal or
Slightl y Higher
Dust : Equal or
Slightl y Lower
Impact of PCI Coal Type on BF Operation
Pig Iron Production by Calendar Year
* assumes same production in 2
nd
half of year 2004
0
25
50
75
100
125
150
1997 1998 1999 2000 2001 2002 2003 2004 P
Mt Asia (excluding China)
0
25
50
75
100
125
150
1997 1998 1999 2000 2001 2002 2003 2004 P
Mt EU15
0
20
40
60
80
1997 1998 1999 2000 2001 2002 2003 2004 P
Mt
NAFTA
0
20
40
60
80
1997 1998 1999 2000 2001 2002 2003 2004 P
Mt
South Ameri ca
*
*
*
*
Source: IISI
Japan Pig Iron by Cal endar Year
* assumes same production in 2
nd
half of year 2004
70
72
74
76
78
80
82
84
1997 1998 1999 2000 2001 2002 2003 2004
Cal endar Year
Mt
Projected
*
Source: IISI
15
16
17
18
19
20
21
22
Months - August 2003 to Jul y 2004
Mt
2003/2004 Correspondi ng peri od 12 months previ ous
Countries include: Japan, Belgium,
France, Germany, The Netherlands, UK,
Brazil, India, Korea & Chinese Taipei
Blast Furnace Iron Production
- Major Coal Importing Countries, August 2003 to July 2004
CRU Steel Price Index, Global
60
70
80
90
100
110
120
130
140
150
160
J
a
n
-
0
2
M
a
r
-
0
2
M
a
y
-
0
2
J
u
l
-
0
2
S
e
p
-
0
2
N
o
v
-
0
2
J
a
n
-
0
3
M
a
r
-
0
3
M
a
y
-
0
3
J
u
l
-
0
3
S
e
p
-
0
3
N
o
v
-
0
3
J
a
n
-
0
4
M
a
r
-
0
4
M
a
y
-
0
4
J
u
l
-
0
4
S
e
p
-
0
4
Index Val ue
Apri l 1994 = 100
Source: CRU Monitor
20 % LV 40 % LV 60 % LV
80 % LV
100
110
120
130
140
150
160
170
180
190
200
0 5 10 15 20 25
LV PCI Coal Requi rements (Mt )
PCI Rate (kg/tHM)
Source: IISI
* Approx 190 Mt hot metal
(Example onl y)
Impact of Changing PCI Usage Patterns
- Top 10 Steel Producers* Using Imported PCI Coal
Features of Queensland LV Operations
5 independent producers, operating in a
politically stable environment
Large reserve base
Favourable mining conditions (open cut)
World class infrastructure including 3 major
coal terminals
Proven performance and capacity to expand
The future &
concluding
comments
The Future
Demand for LV coal is a function of:
BF hot metal production (coastal plants)
PCI rate (kg/t)
% of low vol in PCI coal
Also depends on price competitiveness relative
to alternative fuels (thermal coal, oil and gas)
Immediate outlook is for continuing strong
demand with measured production increases
from existing mines along with new capacity
J e l l i nbah Res our c es
Thank you