Anglo American plc (LON:AAL) today announced the approval by its Board of the Aquila project to extend the life of the Capcoal underground (Grasstree mine) hard coking coal operations in Queensland, Australia by six years, to 2028 (“the Project”). With an expected attributable capital cost of US$226 million, development work is expected to begin in September 2019, with first longwall production of premium quality hard coking coal in early 2022.
Seamus French, CEO of Bulk Commodities, said: “Aquila offers us a high margin six-year life extension to our Grasstree mine, with an average annual saleable production of 3.5 million tonnes (attributable) of premium quality hard coking coal at a real, post-tax IRR of more than 30%, and an EBITDA margin of 40% at consensus long term prices. The project benefits from low capital intensity as we can use the existing infrastructure and systems from our adjacent Grasstree mine that is coming towards the end of its economic life, as well as providing continuity of employment for our workforce.”
The Capcoal complex includes the Capcoal open cut and Grasstree underground operations, both managed by Anglo American. The underground operations are owned 70% by Anglo American and 30% by Mitsui & Co. Ltd. (“Mitsui”). The Project is also subject to approval by Mitsui. In 2018, the Capcoal open cut produced 2.0 million tonnes of metallurgical coal products and Grasstree underground produced 3.6 million tonnes of hard coking coal (attributable). The Capcoal open cut operations have a Reserve Life of 20 years, as at 31 December 2018.
