FORECAST: GPC boss believes the price of coal won't keep rising.
FORECAST: GPC boss believes the price of coal won't keep rising. Lee Constable

US report claims Galilee Basin coal mines are massive risk

GALILEE Basin miners have slammed an American anti-coal group's claims their operations are a risky investment.

The report from Ohio based Institute for Energy Economics and Financial Analysis, which lists a mission to "reduce dependence on coal", said Galilee Basin mines would struggle to find investors due to mines not yet proving their operational worth, the drop in coal prices and foreign companies owning the two biggest operations.

US based report author, and IEEFA finance director, Tom Sanzillo said GVK's Alpha mine and Adani's Carmichael mine represented massive risks for investors.

"The huge scale, greenfield nature and foreign ownership of these two projects brings an almost unprecedented level of financial complexity and risk," he said.

"This project faces an increasingly difficult hurdle in securing funding due to the rapid deterioration of coal project profitability following a halving of the coal price."

However, GVK spokesman Josh Euler said analysis based on other operations was flawed.

"If analysts are applying the same cost structures found in other existing regions, such as the Bowen Basin for example, to our large-scale greenfield site, they would clearly get their figures wrong," he said.

"Even in the current market conditions, our Galilee Basin coal assets are differentiated from other mines due to their projected low production costs, sought after coal quality, advanced stage of approvals, advanced stage of construction readiness and access to a proposed viable transport solution connecting our assets to export markets."

Mr Euler said GVK had already established partnerships with Aurizon and had made "significant progress in identifying investors, lenders and potential strategic partners".

- APN NEWSDESK


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