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Anglo American approves 5 Mtpa Grosvenor metallurgical coal project in Queensland

06 December, 2011

Anglo American announces the Board approval of its 5 million tonne per annum (Mtpa) Grosvenor metallurgical coal project in the Bowen Basin of Queensland, Australia. The greenfield Grosvenor project is situated immediately to the south of Anglo American’s Moranbah North metallurgical coal mine and is expected to produce 5 Mtpa of metallurgical coal from its underground longwall operation over a projected life of 26 years. Capital expenditure for the Grosvenor project is forecast at US$1.7 billion(1) on a nominal basis, representing a highly competitive capital intensity ratio for the project.

Cynthia Carroll, Chief Executive of Anglo American, said: “Anglo American is delivering substantial near term production growth, across our copper, nickel and iron ore businesses, with two of our four major strategic growth projects already coming on stream during 2011. Grosvenor is the first of our next phase growth projects and will initiate our industry leading production growth of metallurgical coal from our Australian business over the next decade.”

The Grosvenor project is 100% owned by Anglo American and forms a major part of the group’s strategy of tripling production of metallurgical coal from its Australian assets by 2020 using a standard longwall and coal handling and preparation plant (CHPP) design model. In its first phase of development, Grosvenor will consist of a single new underground longwall mine, targeting the same well understood Goonyella Middle coal seam as Moranbah North, and will process its coal through the existing Moranbah North CHPP and train loading facilities. A pre-feasibility study for expansion by adding a second longwall at Grosvenor is under way.

Grosvenor is expected to benefit from operating costs in the lower half of the cost curve. Synergies are also expected from the integration of Grosvenor with Moranbah North, including from blending and yield improvement, while a continued focus on improving longwall productivity to 100 cutting hours per week across the business’ underground operations will deliver further value.

Seamus French, CEO of Anglo American’s Metallurgical Coal business, added: “We are excited to be developing the first growth phase of our planned Moranbah hub which will drive our target of 12% compound annual production growth by 2020. Grosvenor and the wider hub will produce some of the highest quality coking coal in the world and represents a major investment commitment for the region. Our longwall design model will enable us to replicate our approach across our expansion footprint, ensuring the transfer of best practice project efficiency, cost control and risk mitigation. We have also now received confirmation of our development rights from the Queensland government for the expansion of the Abbot Point coal port – a dedicated export facility that would have the capacity to accommodate the growth from our Moranbah hub.”

First development coal from Grosvenor is expected in 2013 and the commissioning of the longwall in 2016. Such project timings are contingent upon the receipt of the appropriate licences and permits. Grosvenor has received approval of its Environmental Impact Statement, the project’s Environmental Authority is in train and the key Mining Lease is anticipated
in Q1 2012.

Note:

(1) Capital expenditure for the Grosvenor project is forecast at US$1.7 billion on a nominal basis. The majority of the capital expenditure will be incurred in Australian dollars and therefore assumes certain projected exchange rates.

Notes to editors:

Anglo American is one of the world’s largest mining companies, is headquartered in the UK and listed on the London and Johannesburg stock exchanges. Anglo American’s portfolio of mining businesses spans bulk commodities – iron ore and manganese, metallurgical coal and thermal coal; base metals – copper and nickel; and precious metals and minerals – in which it is a global leader in both platinum and diamonds. Anglo American is committed to the highest standards of safety and responsibility across all its businesses and geographies and to making a sustainable difference in the development of the communities around its operations. The company’s mining operations and extensive pipeline of growth projects are located in southern Africa, South America, Australia, North America and Asia. www.angloamerican.com

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