Xstrata mulling new partner for Australia coal mine

Swiss mining group Xstrata said it was looking at bringing a new partner into its Wandoan coal mine in Australia, but did not say how much of the US$6.4 billion project was up for sale. A report on Tuesday by Dow Jones Newswires said Xstrata was offering to sell 20.0 percent of the proposed project, which is expected to tap surging Asian demand for coal. Xstrata Coal, which owns 75.0 percent of the proposed Wandoan joint venture with Japanese partners, said it was investigating options for the project's development as part of its feasibility process. "This includes the potential to introduce an additional partner into the project where this represents value for our shareholders and the best outcome for all stakeholders," the company said in a statement. Xstrata said Wandoan, in the resource-rich northeastern state of Queensland, was initially seen as producing 22 million tonnes of thermal coal per year, expanding to 63 million tonnes and with future growth potential beyond that. "The project will require significant capital investment to establish new rail and port infrastructure," the company said. The project is hoped to generate up to 1,300 jobs and is seen as critical in establishing the Surat Basin as a major thermal coal export region for Asia. "Xstrata Coal remains committed to the project; it is an important component of the company's organic growth pipeline," it added. Australia is riding a resources boom as Asian companies, including electricity suppliers, are seeking to shore up supply of commodities to meet future demand. Australia has already given conditional environmental approval for the project in which Japan's Itochu and Sumitomo each hold a 12.5 percent stake. But in August environmental activists launched an unprecedented court challenge to the mammoth Australian coal mine on climate change grounds, arguing emissions from mining and burning the coal will impact the climate. The company has said it "followed a rigorous environmental assessment and review process throughout each stage of the Mining Lease Application process". Xstrata is the world's largest exporter of thermal coal burned to produce power and the sprawling 32,000 hectare (80,000 acre) Wandoan project is expected to have 30-year mine life.