Peabody Energy confirmed it has decided to advance plans for redevelopment of the North Goonyella coking coal longwall operation in Queensland with 70 million tons of its company-controlled reserves.

Photo: Peabody Energy

In its third-quarter earnings report, executives discussed the plan and confirmed its initial redevelopment capital expenditure budget of A$140 million over the coming 18 months has already been approved.

“Development costs beyond the current board approved amounts are estimated to be an additional $240 million bringing total estimated capital to approximately $380 million over three years.”

The outline includes “substantial infrastructure and equipment in place” at the operation, including a new 300-metre longwall system that would commence operations in 2026. Changes also include a coal handling preparation plant, dedicated rail loop for coal transport to the Dalrymple Bay Coal Terminal (DBCT) and a 400-worker-capacity accommodation village with housing and service amenities.

“This infrastructure makes this opportunity superior to other green and brownfield projects that do not have a significant infrastructure in place,” the company said during the call. “North Goonyella is expected to generate attractive returns at historical long-term price assumptions while reweighting Peabody's long-term production and revenue towards metallurgical coal in line with our strategy.”

As work gets going, Peabody asked for government regulators to examine the state’s “extreme royalty structure” for the industry.

“As we take the first steps toward redevelopment at North Goonyella, we continue to urge the Queensland government to roll back their extreme royalty structure, which will not only discourage investment in Queensland but also risks to tens of thousands of jobs and local business opportunities that coal mine delivers to regional communities,” executives said.

Sources: Peabodyenergy.com and Peabody Energy Corporation (BTU) Q3 2022 Earnings Call Transcript | Seeking Alpha