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Sign of the times? Coal giant scraps $2 billion project with swipe at government

Glencore has scrapped plans for the $2 billion Valeria thermal coal mine in central Queensland and pointed to the damaged confidence created by Queensland’s royalty hikes.

Dec 08, 2022, updated Dec 08, 2022
Glencore has finally landed Teck Resources in a huge strategic move in the coal sector (photo supplied)

Glencore has finally landed Teck Resources in a huge strategic move in the coal sector (photo supplied)

The mining giant, which has extensive metal mining operations in Mt Isa, said it had withdrawn the Valeria project from the approvals and would place the project under review.

The company has scheduled 12 coal mine closures by 2035, including Newlands in central Queensland. Its Valeria project was not scheduled to start development until 2024 and Treasury has said thermal coal would not be in the higher royalty tier then.

A spokesman for Treasurer Cameron Dick said Glencore had made it clear they were exiting thermal coal, so you would not expect them to open new thermal coal mines.

But it has also discovered a potential saviour of the Millmerran power station through a carbon capture and storage project with the capacity of 1 billion tonnes in the Surat Basin.

It has also kicked off pre-feasibility on a blue hydrogen project using the Wandoan coal resource. The CO2 would be captured and stored in the nearby Surat Basin site.

But it has been highly critical of the State Government.

“Abrupt decisions like the Queensland super royalty hike have damaged investor confidence, increased uncertainty and raised a red flag with key trading partners,” a Glencore spokesman said.

“Governments are already benefiting from higher royalty and corporate tax revenue from the Australian coal sector. Glencore will be among the largest corporate tax and royalty payers in Australia for the 2022 financial year.

“Genuine and timely consultation with companies on the detail of policy reforms is crucial to avoid continued uncertainty.”

Glencore’s Newlands mine in central Queensland was also expected to close within the next four years.

The Valeria decision is significant because it now allows the industry to point to a major job creator falling over in Queensland partly because of the royalty hike which has delivered a $2 billion windfall for the State Government.

Glencore chief executive Gary Nagle said coal was critical in the transition to clean energy.

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“We believe it’s our responsibility with our coal business to help promote that transition and ensure that those areas of the world that require energy today using fossil fuels still have the access to that.  But we do it in a responsible manner, where we will run down our coal business and continue with our commitment to reduce our Scope 1, 2 and 3 emissions by 15 per cent by 2026 and by 50 per cent by 2035, off our 2019 base year with a net zero ambition by 2050.

“Now the key area for us to point out is this is a 1, 2 and 3 emission reduction, something that our peers are all struggling with.”

“We’re also investing in technology.  CTSCo is a project in Australia, where we are seeking to capture carbon emissions from the Millmerran power station and capture and sequestrate that carbon in the Surat Basin.

“We’re identified an area for storage. It’s well over 1 billion tonnes of storage.

“So it has significant potential for not only the Millmerran Power Station, but multiple projects within the region as we develop up and prove this technology both from an industrial and from a commercial scale.

“It really is a technology that, with the right investments, can assist the world in its decarbonisation.

“We’ve added another string to that bow in that we’re now starting some pre-feasibility work on a blue hydrogen project. Blue hydrogen can be produced form coal at one of our existing coal mines and our ongoing coal mine, where we will study the potential production of blue hydrogen at that operation. In converting it to blue hydrogen, we would capture the carbon and sequestrate that to the very safe place where we have the CTSCo storage site.

“So technology is a big part of the drive in Glencore, not only decarbonisation, but in everything we do.”

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