Aussie project go-ahead a revenue boost for Linc

THE Australian government's approval for the development of the Carmichael coal mine in Queensland would generate about A$133 million (S$154.1 million) a year in revenue for mainboard-listed Linc Energy, as it owns royalty over the coal that is mined and transported.

Not only that, the value of the royalty contract - which can be traded - will also "increase considerably", said its CEO Peter Bond in a news release yesterday.

Linc Energy sold the underlying coal asset to Indian conglomerate Adani Group in August 2010, and holds an inflation-indexed royalty contract that provides for A$2 for each tonne of coal produced from the Carmichael coal mine for the first 20 years of production.

The proposed development of what is expected to be the largest coal mine in Australia, has got environmentalists up in arms as they say it would threaten the Great Barrier Reef.

Australia's environment minister Greg Hunt, in giving approval for the coal mine and an accompanying rail project in Queensland on Monday, said that the development was subjected to 36 conditions.

The mine is forecast to produce 60 million tonnes of thermal coal a year at its peak. Linc Energy arrived at the A$133 million figure in royalty revenue based on this.

The mine, which by some estimates will provide fuel to generate electricity for up to 100 million people in India, is expected to contribute about A$3 billion to the Queensland economy each year at full capacity, and generate thousands of jobs.

All coal will be transported through a privately-owned railway that Adani will build with South Korean firm Posco E&C, which connects to the existing Aurizon rail infrastructure near Moranbah, and shipped through coal terminal facilities at the Port of Abbot Point and/or the Port of Hay Point.

"From a personal viewpoint, it was Linc Energy that explored the area and discovered this great coal resource, so every Linc Energy shareholder should be proud of the fact that this significant project exists because of the entrepreneurial endeavours of our team and our company," said Mr Bond. "We look forward to watching the Carmichael project develop into Australia's largest coal mining operation."

The counter closed 0.5 cent lower at S$1.25 yesterday.