Mine reports reflect sides being taken

IT PAYS to dig a little deeper when it comes to the mining game.

Mackay businesses have been warned to take reports on the economic viability of planned resource projects with a grain of salt as both opponents and supporters of the industry ramp up their rhetoric.

Yesterday, a Greenpeace-commissioned report was released which focused on the financial future of Indian company GVK's planned $10 billion Alpha coal mine, located in the Galilee Basin west of Moranbah.

The report said the project was "struggling" with "little prospect of financial viability" and warned investors against committing capital to the venture.

GVK has rejected the report, and said its coal operations were "financially robust with some of the lowest operating costs in the global coal industry".

GVK's Indian competitor, Adani Mining, has also faced scrutiny since announcing plans last month for a 300km railway line from its planned Carmichael Mine in the Galilee Basin to Abbot Point.

Last week, various media outlets reported the company had lost 35% of its share value in just six months and its future was uncertain.

Meanwhile, a State Government media release issued on Monday spruiked the "coordinated project" declaration of an extension of a coal mine 20km north of Moranbah, in the Bowen Basin.

The release said BMA's Red Hill project would create up to 3500 jobs if it passed various state and federal environmental approvals.

The excitement over various projects has been met with scepticism by Mackay businesses, which are still struggling to recover following a slowdown in the sector owing to a high Australian dollar and low coal prices.

On Tuesday, a Mackay Area Industry Network meeting was held and members were told to adapt to the downturn or risk ruin.

MAIN deputy chairman Allan Ruming said resource companies would commence mining only when the conditions were right, regardless of what other interested groups had to say.

"At the end of the day you've got Greenpeace ... saying projects won't go ahead, but they're not the decision makers for those companies," he said. "Those who own the leases over the asset, it's ultimately their decision and that's done on very sound and rational processes."

Mr Ruming said mining companies were notoriously fickle when it came to determining the worth of a project.

"It ... comes back to simple economics," he said. "If the value of coal drops they'll put it on hold."

 

RIDING THE DOWNTURN

ALLAN Ruming has ridden the mining downturn like every other Paget director.

In the past 12 months he's been forced to reduce staff at mining services company Group Engineering from 35 to five.

"We started preparing for this downturn in May last year," Mr Ruming said.

"We saw it coming, changed our model but by December started to shed people on a planned basis to match the work."

Mr Ruming said the Mackay Area Industry Network had been urging businesses to diversify beyond the coal sector for a decade, and said the boom times were now far behind the industry.

"We've been saying to our members look outside the box," he said.

"No one is expecting to go back to doing what they were 12 months ago.

"The change we're seeing is long-term and we have to adapt and respond."


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