NRW broadens coal contract

NRW Holdings and Stanmore Coal have agreed to amend the contract for the Isaac Plains East coal operation in Queensland.
NRW broadens coal contract NRW broadens coal contract NRW broadens coal contract NRW broadens coal contract NRW broadens coal contract

Isaac Plains

Staff reporter

Stanmore is making additional investments in the mine to improve efficiencies.

NRW subsidiary Golding Contractors and Stanmore have reached agreement to increase overburden removal capacity with the addition of a third truck and excavator fleet.

The new contract mine plan is seeking to sustain current coal production volumes of about 3 million run-of-mine tonnes per annum.

From August, Golding will supply an additional Hitachi EX3600 excavator, five EH3500 Hitachi trucks and the remainder of the ancillary fleet, the majority of which will be mobilised from NRW's Middlemount project.

Stanmore will acquire a 600t excavator via a loan facility with Caterpillar Financial Australia, which will be operated by Golding.

The value of the increase in scope of the contract adds about A$450 million to the existing five-year contract, with the total contract sum estimated to be roughly $950 million at the current mine production levels.

NRW CEO Jules Pemberton said the two companies had a productive relationship.

"We expect our capital commitment to be very low at around $10 million as we are able to utilise fleet secured through an agreed early release from the Middlemount coal contract".

"The Middlemount contract is not formally due for completion until the end of FY20 however we will be able to release certain fleet prior to that date and some fleet will also likely remain on site beyond the formal contract end date.

"As the Middlemount project is a maintained dry hire contract, the release of our fleet will enable us to re commit these assets to existing and new full-service contract mining opportunities in line with our mining divisions delivery model."

The overall increase in revenue at Isaac Plains from FY21 onwards fully offsets the reduction in revenue at Middlemount when the current contract completes at the end of FY20.

Meanwhile, Stanmore said it would defer the Isaac Plains underground to prioritise higher margin production.

NRW shares were unchanged at $2.52, while Stanmore was up 1% to $1.45.