Xstrata admits Wandoan Coal may crumble in tough market

Poor market conditions are having a significant impact on coal operations around Australia.
Poor market conditions are having a significant impact on coal operations around Australia. Jill Poulsen

XSTRATA has conceded its $7 billion Wandoan Coal project in south-west Queensland could be in doubt.

It follows Xstrata's $90 billion merger with Swiss mining giant Glencore International finalised on Tuesday.

The revelations on the massive development came from Xstrata rail and port general manager Dierdre Mikkelson who spoke at a major projects conference in Brisbane on Thursday.

Ms Mikkelson said Xstrata expected the State Government to approve its mining lease early next year but its future rested on market conditions and its ability to score funding.

"The Wandoan coal project is yet to receive final investment decision," Ms Mikkelson said.

During a panel discussion with representatives from Cockatoo Coal, Surat Basin Rail and the State Government, Ms Mikkelson was asked if Xstrata's merger with Glencore was the cause of the uncertainty.

Ms Mikkelson said she felt it inappropriate to comment on what effect, if any, the merger would have on the Wandoan project.

If given the go-ahead, Wandoan would take four years to build and employ between 700 and 800 permanent workers once complete.

The Wandoan project is a vital cog in justifying the need for a large scale rail line and train set that would funnel Surat Basin coal through the port of Wiggins Island or Balaclava Island, both near Gladstone.

Surat Basin Rail chief operating officer Allan Miller - who sat beside Ms Mikkelson on the panel - described the need for Wandoan as a "one in, all in" approach.

"People appreciate the Wandoan mine is ac critical component for the volume of coal that will go down that line," he said.

"It will have its challenges to put together a project - making it bankable, then funding it as it goes along - without that full commitment."

Topics:  business economy glencore mining industry surat basin wandoan coal project xstrata coal

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