Home > News > THE BOWEN BASIN AND BEYOND: WHAT’S NEXT FOR STANMORE RESOURCES?

THE BOWEN BASIN AND BEYOND: WHAT’S NEXT FOR STANMORE RESOURCES?

27 May 2022 | Industry NewsBBMC News

Going from a relatively unknown player to one of the largest global metallurgical coal producers, it’s been a significant 12 months for Stanmore Resources.

Attendees at the Bowen Basin Mining Club’s May luncheon were given an in-depth presentation on Stanmore’s recent bold moves, with Director and CEO Marcelo Matos presenting. Stanmore is going through a notable transformation as a company with the execution of some massive changes, including purchasing BMC’s assets in the Bowen Basin, aiming to build a leading metallurgical coal powerhouse.

From the acquisition of mothballed Isaac Plains in 2015 for just $1 to expansion of the Isaac Plains and Isaac Downs mines, the purchase of a 50% interest in the Millennium/Mavis Downs lease, and the just- completed $1.2 billion acquisition of 80% interest in BMC, the timing of Stanmore’s purchases has been immaculate.

Speaking about the meteoric rise in coal price while all of these transactions were underway, Mr Matos deadpans, “I think we timed it pretty well, and we got a bit lucky!”

“We signed the Millennium deal in April 2021 when hard coking coal prices were just north of US$100/t, completed the deal in July with prices around US$150/t, and sold first cargo in December 2021 when prices were north of US$400/t. We experienced a similar situation with the BMC acquisition with prices now North of US$500/t.”

“We are now one of the largest global producers of metallurgical coal, and we will be watched closer going forward. We are now running four mines within a 50km radius, targeting 5.9-6.5 mtpa of coal in the second half of the year as per recent guidance, equivalent to an annualised rate close to 13 Mt of managed tonnes.”

In addition to their metallurgical coal operations, Stanmore is also now one of the world’s largest individual PCI producers, well-placed in a global market facing tight supply and Russia sanctions.

“Steel demand and production in India and Southeast Asia are still growing. Despite the uncertainties imposed by the inflationary pressure we see worldwide and the potential impact on the global economy and growth, supply is extremely tight now and will not ease for a while as there is less investment in new coal projects. The transition to net zero carbon will demand a lot of steel for electric vehicles, wind turbine blades. High-quality metallurgical coal will continue to be highly demanded, with high thermal coal prices also acting as supporting floor for met coal.

“PCI coal also represent an interesting value proposition to steel makers economically, as well from an emissions standpoint. With Russian PCIs under strict sanctions, markets like North Asia and Europe which are the most affected are naturally being replaced with Australian PCI. This means PCI prices are at historical peaks and close to premium hard coking coal prices. It’s an interesting market to be in,” said Mr Matos.

Mr Matos also covered the significant size of Stanmore’s operations, which now comprise 600+ employees and 700 active suppliers, plus a fleet that includes 3 coal processing plants, 3 draglines, 26 dozers, 8 excavators and 29 haul trucks.

“It’s a big step up for us as a company, from a 20-strong management team to a completely different kind of company, including managing over $600m of procurement in-house this year.”

“We want to simplify doing business with our suppliers, and we’ve been meeting with them to find ways to work smarter, with a more site-centric approach.”

Stanmore’s head of procurement was also in attendance, networking with existing and potential suppliers. The company plans to continue working with local buying initiatives to support local suppliers and communities as part of the transition on the BMC sites.

“The market’s too good to have disruptions, so our integration plan is strongly focused on ensuring business continuity and minimising disruptions to keep things moving. For the suppliers present and interested in working closely with us, we are working our procurement book and strategy and there are many projects and tenders to come in the next few months.”

There’s no time for the company to rest on their laurels, with an ambitious pipeline for future growth and local procurement opportunities. Along with several organic development projects in the pipeline, there are expansions and maintenance projects at Isaac Plains and Isaac Downs, including haul road construction and the establishment of a linking road between Isaac Downs and Poitrel to benefit from unused washing capacity at Poitrel. There are also usual planned shutdowns for draglines, CHPPs, mobile fleet and ancillary equipment.

It’s not all coal-focused either – Stanmore Green is the company’s new vehicle to develop sustainability- focused projects across the company’s Bowen basin footprint.

This includes solar power generation for sites, mine rehabilitation initiatives, and other concepts like hydrogen-powered mining fleet and environmental offsets.

“It’s important for us to look at the best way to leverage our assets and capabilities to promote initiatives and projects to reduce our emissions, carbon footprint and environmental impact,” said Mr Matos.

“It’s a pretty big scope, we need to be careful on what we promise but we’re optimistic about being able to make a difference and work with our community and suppliers to think differently.”

The next Bowen Basin Mining Club luncheon is on Thursday July 28 in Rockhampton, with Coronado Global Resources’ Douglas Thompson presenting. Tickets will go on sale shortly.