Anglo American is set to boost metallurgical coal capacity at a mine complex in Australia 25% as the business once destined for the chopping block turns into a cash machine for the century-old miner.
The company plans to increase processing capacity to 20 million from 16 million tonnes a year at a preparation plant that processes coal from the Moranbah and Grosvenor underground mines, Tyler Mitchelson, CEO of Anglo's metallurgical coal unit, said. A project study was in the early stages and optimization of the existing facilities was expected to be completed over the next few years.
"I don't anticipate making any material investment into the mining complex, it's more about getting improvements out of the assets," said Mitchelson. "We think we can get very significant value out of there and that’s really our focus right now."
Anglo's metallurgical coal division was the biggest earner for the producer in 2017, just two years after the unit — along with its iron ore business — were put up for sale as prices languished. A rebound in coal prices, up 140% since the start of 2016, gave the unit some reprieve, and management halted the disposal plan. The company is now reaping the rewards.
"We generated almost $2 billion of EBITDA [earnings before interest, taxation, depreciation and amortisation]," said Mitchelson. "This is definitely a key core part of the Anglo business model going forward."
Grosvenor, one of the five mines that make up Anglo's metallurgical business in Australia, is to ramp up during 2018 and hit capacity by year-end.
The 20-22 million tonnes expected in 2018 compare favorably with 19.7 million tonnes in 2017.