Energy to burn: Townsville nickel project seals a win-win gas deal

Queensland Pacific Metals has nailed a significant deal to supply gas to its planned Townsville nickel project just a day after it sealed a deal with the German Export Credit Agency for $500 million in debt funding.

Apr 05, 2023, updated Apr 06, 2023
QPM is cashing in on energy volatility (Pic: REUTERS/Raquel Cunha)

QPM is cashing in on energy volatility (Pic: REUTERS/Raquel Cunha)

Under the gas deal, QPM has entered into a conditional agreement with Arrow and AGL to buy the Moranbah Gas Project which will deliver waste gas capacity of 30 petajoules a year.

QPM Energy will pay $5 million for the assets, but will then receive $35 million at the finalisation to allow it assume obligations to supply existing gas supply contracts held by the Moranbah Gas Project.

The business also has a contract for the supply of gas to the Townsville power station, a peaking plant, which was a foundation customer for the gas pipeline.

QPM Energy and Incited are now in advanced negotiations to finalise a long-term supply agreement for the Moranbah ammonium nitrate plant which would include further funding towards development of the gas project.

QPM said it was major milestone for its Townsville TECH project because it would further de-risk the scheme as well as provide a vertical integration of energy supply.

Significantly, the gas is also waste gas from five operating coal mines and there is the opportunity to expand that to other mines in the northern Bowen Basin. QPM said it was also an enabler of the second stage of the TECH project.

“The project will therefore directly reduce carbon emissions from these sites,” the company said.

“The Northern Bowen Basin has the largest concentration of Australia’s coal mine Safeguard (Mechanism) sites. The Moranbah project infrastructure is the critical link that allows these operations to directly reduce their emission by transporting waste gas off their mining leases.”

Current production is about 10 petajoules a year of which 7 PJ goes to Incitec’s ammonium nitrate plant.

QPM managing director Stephen Grocott said it was a significant de-risking event that could not be underestimated.

“This transaction is yet another commercial arrangement that the management team of QPM has been able to orchestrate to bring us one step closer to the construction of the TECH project and deliver value for shareholders,” he said.

Following this week’s announcement of debt funding, QPM has about $1.4 billion in successfully negotiated debt.

Shares in QMP jumped 7 per cent on Wednesday after the announcement.


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