The Queensland Coal Industry Review

Bureau of Mining and Petroleum...the key to Queensland s resource development. The Queensland Coal Industry Review 2002 2003 52nd Edition www.nrme.qld.gov.au/mines

The Queensland Coal Industry Review 2002 2003 52nd Edition

Published by: Department of Natural Resources, Mines and Energy GPO BOX 2454 Brisbane Qld 4001 Australia This publication was prepared by officers of the Department of Natural Resources, Mines and Energy. It may be distributed to other interested individuals and organisations. This publication is intended to provide information only on the subject under review. It is not intended to, nor does it constitute, expert advice. Readers are warned against relying solely on the information contained herein. Further professional advice should be sought before acting on the information supplied in this report. While all care has been taken in the preparation of this document, neither the Department of Natural Resources, Mines and Energy, nor its officers or staff accept any responsibility for any loss or damage that may result from any inaccuracy or omission in the information contained herein. The State of Queensland (Department of Natural Resources, Mines and Energy) 2004 Copyright enquiries should be addressed to: The Director of Product Marketing Department of Natural Resources, Mines and Energy GPO Box 2454 Brisbane Qld 4001 ISSN 1442-1828 QNRME04249 #27011 Compiled by: Ray Smith, David Coffey and Estelle Abbott Design, editing and proofreading: Web and Publishing Services For further information contact: The Bureau of Mining and Petroleum Department of Natural Resources, Mines and Energy Floor 3 41 George Street Brisbane Qld 4000 Australia Telephone: +61 7 3237 1480 Facsimile: +61 7 3237 1534 Cover photograph: Berthing of the Suirei Maru on 14 March 2003, the first vessel to use the new No. 3 Berth at the RG Tanna Coal Terminal, port of Gladstone. The vessel loaded more than 78 000 tonnes of coal from the Kestrel mine for export to Japan (photograph courtesy of Gladstone Port Authority) Title page photograph: Coal being stacked, Moura mine (photograph courtesy of Anglo Coal Australia Pty Ltd) Acknowledgments The Department of Natural Resources, Mines and Energy gratefully acknowledges the cooperation and contributions of representatives from both government and industry, particularly the various coal mining companies, who provided much of the information contained in this publication. ii The Queensland Coal Industry Review 2002 2003

Minister s foreword In 2002 03, the coal industry in Queensland again set new records for both production and exports, driven by growth in the international and domestic markets. Although global demand for high-quality coking and thermal coal increased, the industry faced a more difficult market with rising cost pressures resulting mainly from significant movements in currency exchange rates which eroded much of the competitive advantage of the previous year. The industry achieved record coal exports of 129.2 million tonnes (Mt), thereby maintaining Queensland s position as the largest provincial exporter of coal in the world, with about 20 per cent of the world s seaborne coal trade. While an additional 6.1 Mt of coal were exported in 2002 03, sales revenue declined by A$0.76 billion to A$7.98 billion free on board (FOB) compared with the previous year. Market conditions have since improved into 2004 and coal remains the state s largest export-earning commodity. Traditional Asian markets continued to rate as the most important buyers of Queensland coal, with Japan accounting for 50.5 Mt (39 per cent of total exports), and European countries collectively accounting for 25.5 Mt (20 per cent) for the year. Increased demand from Korea which received 19.8 Mt (15 per cent) and India which received 13.3 Mt (10 per cent) contributed to the increased sales performance. The coal industry is a key driver for regional economic development, and in 2002 03 it generated an increase in employment of 237 jobs compared with the previous year, with further expansion in progress. The industry and its supporting service providers have continued to bring prosperity to a significant portion of regional Queensland. The industry has maintained a high safety record, with workplace incidents again reduced throughout the year even Top: Stephen Robertson, Minister for Natural Resources, Mines and Energy though the workforce increased considerably. The safety performance of Queensland s coal mines remains equal to or better than that of comparable mines elsewhere. This achievement is underpinned by appropriate mine safety legislation and the collective commitment to safety by the operating companies, their personnel, and government. Internationally, growth in demand for coal continues to rise, and the Queensland coal industry is well positioned, in terms of both coal resources and infrastructure capacity, to meet this demand and maintain its share of an expanding market. This position is underpinned by a large resource inventory of coal within well-serviced areas of the Bowen Basin in central Queensland and the Surat Moreton basins in south-east Queensland. Expansion of the industry continued in 2002 03, with new mines under development or at an advanced planning stage including the Hail Creek and Moorvale opencut operations, the new Broadmeadow underground punch longwall mine at Goonyella, and the Grasstree Colliery project at German Creek. The Queensland coal industry continues to offer opportunities for investors, with coal export growth showing no signs of slowing. The development and application of clean coal technologies, many still in their infancy, will continue to improve the status of coal over time. These and other technological solutions will help to ensure that coal remains an important commodity for the foreseeable future and continues to be a major contributor to Queensland s prosperity. Stephen Robertson Minister for Natural Resources, Mines and Energy The Queensland Coal Industry Review 2002 2003 iii

In this review The Queensland coal industry 2002 2003 1 Coal mining operations 5 Exploration and resources 11 Transport and shipping 19 The electricity industry 24 Coal research activities 28 Health and safety 32 Mine and company information 34 Queensland coal statistics 53 iv The Queensland Coal Industry Review 2002 2003

The Queensland coal industry 2002 2003 Overview During fiscal 2002 03, the Queensland coal industry continued to expand, achieving record production levels as well as record export and domestic sales. Coal continued to be the largest export earner for Queensland with the value of sales amounting to A$7.98 billion free on board (FOB). Raw coal mined increased from 190.07 million tonnes (Mt) in 2001 02 to 195.17 Mt in 2002 03, up 5.1 Mt (2.7 per cent). On a mine-type basis, production of raw coal from open-cut operations increased by 9.1 Mt (6.0 per cent) from 151.29 Mt to 160.39 Mt, while production from underground mines declined by 4.0 Mt (10.3 per cent) from 38.78 Mt to 34.77 Mt. Production of saleable coal increased by 5.24 Mt (3.5 per cent) from 148.36 Mt to 153.60 Mt. On a mine-type basis, the tonnage of saleable coal derived from open-cut operations increased by 9.12 Mt (7.8 per cent) from 117.23 Mt to 126.35 Mt, while saleable production from the underground mines declined by 3.88 Mt (12.5 per cent) from 31.13 Mt to 27.25 Mt. Total coal sales during 2002 03 amounted to 153.46 Mt. Queensland maintained its position in 2002 03 as the world s largest exporter of seaborne coal, with total exports of a record 129.22 Mt to 35 countries throughout the world, up 6.11 Mt (5.0 per cent) on the 2001 02 tonnage of 123.11 Mt. Statistical summary Saleable production Open-cut 126.35 Mt Underground 27.25 Mt Total 153.60 Mt Exports Coking 86.86 Mt Thermal 42.36 Mt Total 129.22 Mt Value ($A billion FOB 1 ) 7.982 Domestic consumption Queensland 24.19 Mt Interstate 45.79 Kt 2 Employment as at 30 June 2003 Open-cut 8 185 Underground 2 528 Total 10 713 Productivity tonnes of saleable coal per employee 3 Open-cut 15 347 Underground 11 082 Overall 14 366 Number of mines at 30 June 2003 Open-cut 34 Underground 10 1 free on board 2 kilotonne 3 See explanatory notes, page 53 Top: Overburden removal Blackwater mine (Photograph Department of Natural Resources, Mines and Energy) The Queensland coal industry 2002 2003 1

Tonnes (millions) Tonnes (millions) 200 180 160 140 120 100 80 60 40 20 0 160 140 120 100 80 60 40 20 0 Queensland coal production 1999 2000 2001 2002 Year to June 30 Raw Saleable Saleable production 2002 03 Open-cut Underground Coking Thermal Total 2003 Figure 1: Queensland raw and saleable coal production Figure 2: Saleable production 2002 03, by mining method and coal type Domestic coal sales within Queensland amounted to 24.19 Mt, an increase of 0.48 Mt (2.0 per cent) on the 2001 02 figure of 23.71 Mt. Approximately 90 per cent of the Queensland consumption was used in the state s electricity industry. Sales to customers in other Australian states amounted to approximately 46 000 tonnes of coal. The total number of people employed in the Queensland coal industry increased by 237 (2.3 per cent) from 10 476 on 30 June 2002 to 10 713 on 30 June 2003. Of that number, 8185 were associated with open-cut operations, an increase of 199 on the 30 June 2002 level of 7986. The number of people associated with underground operations was 2528, as compared with 2490 on 30 June 2002. Two new open-cut mines commenced production during the 2002 03 financial year at New Acland (August 2002) and Moorvale (March 2003) while production from the Ebenezer open-cut mine west of Brisbane ceased in December 2002. In addition, the first of two bulk samples was taken from the Rolleston test pit between September and December 2002. Exploration activity continued to increase during the year with the area of the state covered by exploration permits for coal (EPCs) and EPC applications at an all-time high at year s end. While the current outlook for the Queensland coal industry appears to remain relatively strong, coal pricing, currency exchange rates, and the timely development of future projects and related infrastructure will continue to be key factors in ensuring the competitiveness of the industry in Queensland. Tonnes (millions) 140 120 100 80 60 40 20 0 Queensland coal exports 1999 2000 2001 2002 2003 Year to June 30 Coking Thermal Figure 3: Coal exports fiscal years 1998 99 to 2002 03, by coal type Production During 2002 03, the Queensland coal industry achieved record production levels with total raw coal production of 195.17 Mt from which 153.60 Mt of saleable coal was produced, an increase of approximately 2.7 per cent on the total for 2001 02. Figure 1 shows the steady increase in production of raw and saleable coal from Queensland s mines over the financial five-year period from July 1998 to June 2003. Figure 2 shows the relative proportions of the state s 2002 03 saleable coal production by mining method and coal type. Approximately 82 per cent of the production (126.35 Mt) was mined by open-cut methods with 2 The Queensland coal industry 2002 2003

underground mining accounting for the remaining 18 per cent (27.25 Mt). Coking coal accounted for 50 per cent (63.39 Mt) of the open-cut production and almost 79 per cent (21.47 Mt) of the underground production, or 55 per cent of the overall saleable production. Coal sales Buoyed by strong international demand, total coal sales during 2002 03 amounted to 153.46 Mt, with exports setting a new record of 129.22 Mt to 35 countries throughout the world. Exports increased by 6.11 Mt (5.0 per cent) on the 2001 02 tonnage of 123.11 Mt and domestic coal sales within Queensland amounted to 24.19 Mt, up by 0.48 Mt (2.0 per cent) on the 2001 02 figure of 23.71 Mt. Sales to customers in other Australian states amounted to approximately 46 000 tonnes of coal. Coal remains Queensland s largest export earner, with the industry achieving overseas sales revenue of A$7.98 billion (FOB) in 2002 03, a decrease of 8.7 per cent on the value of coal exports in 2001 02 despite the additional 6.11 Mt shipped. The relatively low US dollar prices, particularly in the thermal coal spot market, and less favourable currency exchange rates decreased sales revenues in Australian dollars. During the year the Australian dollar appreciated in value from A$1.00 = US$0.548 in July 2002 to A$1.00 = US$0.667 in June 2003 (Reserve Bank of Australia web site, <www.rba.gov.au>). Domestic sales that were comprised mainly of lower grade thermal coals added more than $0.5 billion (ex-mine) to the sales revenues of the mines. The Queensland Government received over $530 million in royalty revenue from coal mining in 2002 03. Exports International demand for Queensland metallurgical coals (coking and PCI coals) remained relatively static during 2002 03 while thermal coal exports increased significantly. Overall, coal exports increased by 6.11 Mt (5.0 per cent) in 2002 03 to a record 123.22 Mt (Figure 3). On a coal-type basis, metallurgical coal exports, comprising coking coal used in steel making and coal used for pulverised coal injection Tonnes (millions) 60 50 40 30 20 Queensland coal exports, by region 10 0 1998 99 1999 00 2000 01 2001 02 2002 03 Financial year Japan Other Asia Europe Other Figure 4: Coal exports by region, fiscal years 1998 99 to 2002 03 (PCI) into the blast furnace, increased marginally, by 0.65 Mt (0.75 per cent) from 86.21 Mt in 2001 02 to 86.86 Mt in 2002 03. Thermal coal exports increased by 5.46 Mt (14.8 per cent) from 36.90 Mt in 2001 02 to 42.36 Mt in 2002 03. Coal was shipped to 35 countries throughout the world. Japan continued to dominate as the largest importer of Queensland coals, buying 50.45 Mt (29.33 Mt of coking coal and 21.12 Mt of thermal coal) or 39 per cent of the state s coal exports for 2002 03. Korea maintained its position as the state s second largest coal customer, taking 19.79 Mt, an increase of 20 per cent on the total tonnage purchased in 2001 02. Other major purchasers were India (13.29 Mt), Taiwan (5.93 Mt), the United Kingdom (5.67 Mt), France (5.10 Mt), Brazil (3.91 Mt) and the Netherlands (3.27 Mt). Collectively, shipments to Europe amounted to 25.54 Mt, representing 20 per cent of Queensland s coal exports for the year. Figure 4 shows the change in the volume of Queensland coal exports to Japan, the rest of Asia, Europe, and other countries over the five-year period from 1998 99 to 2002 03. The average export price (FOB) of coking coal declined to $A71.17 per tonne, an 11 per cent decrease on the average price (CPI adjusted) for 2001 02. Similarly, the average price for thermal coal declined by 26 per cent to $A42.50 compared to the average price received in 2001 02. The Queensland coal industry 2002 2003 3

Domestic coal consumption During 2002 03, domestic coal purchases in Queensland increased to 24.19 Mt, up 0.48 Mt (2.0 per cent) on the 23.71 Mt that was purchased in 2001 02. Approximately 90 per cent of the Queensland coal consumption was used in the state s electricity industry. Sales to customers in other Australian states amounted to approximately 46 000 tonnes of coal. The increase in the Queensland consumption of coal in 2002 03 was almost entirely due to increased demand in the electricity industry, which purchased 21.66 Mt, up 0.50 Mt (2.4 per cent) on the 2001 02 figure of 21.16 Mt. Consumption by the other domestic industry groups recorded slight increases or remained almost static as shown in Table 1. Domestic coal consumption Domestic coal sales (Mt) 2000-01 2001-02 2002-03 Consumer group The number of employees associated with underground operations (2528) increased by 1.5 per cent on the number at 30 June 2002. Productivity per employee for the Queensland coal industry as a whole decreased by 6.1 per cent, from 15 306 tonnes of saleable coal in 2001 02 to 14 366 tonnes in 2002 03. On a mine-type basis, the average yearly output of saleable coal per employee for open-cut operations decreased by 4.2 per cent from 16 026 tonnes during 2001 02 to 15 347 tonnes during 2002 03. The average yearly output of saleable coals per employee for underground operations decreased by 15.4 per cent from 13 093 tonnes during 2001 02 to 11 082 tonnes during 2002 03. On an employee shift basis, the overall productivity of Queensland s underground mines in 2002 03 declined by 9.8 per cent to 41.92 tonnes of saleable coal per employee shift, while productivity in open-cut operations increased by 1.5 per cent to 59.7 tonnes of saleable coal per employee shift in the same period. Electricity 18.37 21.16 21.66 Metal processing 1.65 1.77 1.73 Building materials 0.19 0.20 0.21 Paper pulp and board 0.10 0.10 0.10 Coke works 0.05 0.06 0.06 Food processing 0.29 0.21 0.21 Other 0.23 0.21 0.22 Total 20.88 23.71 24.19 Table 1 Employment and productivity 1 As at 30 June 2003, the Queensland coal industry directly employed a workforce (including contractors) of 10 713, an increase of 237 (2.3 per cent) on the level of employment at the end of 2002 03 (Figure 5). Open-cut operations accounted for 8185 persons (76.4 per cent of the total workforce), representing an increase of 2.5 per cent on the corresponding figure for 30 June 2002. Persons 12 000 10 000 8000 6000 4000 2000 0 Queensland coal industry employment 1999 2000 2001 2002 Open-cut At June 30 Underground 2003 Figure 5: Queensland coal industry employment, 1998 99 to 2002 03, by mine type 1 See Explanatory notes, page XXX 4 The Queensland coal industry 2002 2003

Coal mining operations Queensland coal mine ownership A number of changes to mine and operating company ownership occurred during 2002 03 and in the subsequent period to the preparation of this text in early 2004. Since July 2002, a number of ownership changes, internal restructures and equity redistributions have occurred within certain companies and joint ventures operating within the Queensland coal industry. Some companies have formed strategic alliances or joint ventures with a number of Japanese companies that have had longstanding involvement in the state s coal industry. These Japanese companies have availed themselves of opportunities that have arisen in recent years to increase their equity position in Queensland coal projects. Currently, there are four major coal producers operating within the state that clearly dominate coal production. These are the BHP Billiton Mitsubishi Alliance (BMA) (also operating on behalf of BHP Mitsui Coal Pty Ltd); Rio Tinto Coal Australia Pty Limited; Anglo Coal Australia Pty Ltd (in joint venture with Mitsui Coal Holdings Pty Ltd); and Xstrata Coal Queensland Pty Ltd (a wholly owned subsidiary of Xstrata Plc). During 2002 03 coal mines operated by these four groups accounted for more than 76 per cent of Queensland s saleable coal production. In July 2002, Anglo American Plc and Mitsui & Co. Ltd of Japan completed a transaction for new joint venture arrangements between their wholly owned subsidiaries, Anglo Coal Australia Pty Ltd (Anglo Coal) and Mitsui Coal Holdings Pty Ltd (Mitsui). The arrangements included Mitsui s acquisition from Anglo Coal of a 30 per cent interest in the German Creek mine and a 49 per cent interest in the Theodore and Dawson deposits in the southern Bowen Basin and the Taroom deposit in the northern sector of the Surat Basin. In August 2002, the world s largest private-sector coal mining company, Peabody Energy Corporation of the USA (Peabody), returned to Australia with its purchase of the Wilkie Creek mine in the Surat Basin of southern Queensland. In 2002 03 the Wilkie Creek mine produced 1.04 Mt of high volatile thermal coal for export, mainly to customers in Japan. In November 2003, Peabody announced an agreement to purchase the RAG Coal International AG interests in the North Goonyella (100 per cent) and Burton (95 per cent) coking coal mines in the Bowen Basin along with the Twentymile underground mine in Colorado, USA. The transaction was completed in April 2004. RAG Australia Coal Pty Ltd had earlier, in January 2003, increased its ownership of the North Goonyella mine to 100 per cent by acquiring Thiess Pty Ltd s 40 per cent stake. As a joint venture partner in the original Moura mine with Thiess Bros and Mitsui & Co. Ltd, Peabody helped to pioneer the development of Queensland s modern export coal industry that has been largely based on the highly sought after coking coal resources of the Bowen Basin. Top: Coal mining, Commodore Mine (Photograph courtesy of Millmerran Operating Company Pty Ltd) Coal mining operations 5

In December 2003, Rio Tinto Limited announced changes in the management of its Australian coal operations. The corporate and service functions of its 75.7 per cent owned subsidiary, Coal & Allied Industries Limited, and 100 per cent owned subsidiary, Pacific Coal Pty Limited, has been amalgamated and is now administered by Rio Tinto Coal Australia Pty Limited out of its office in Brisbane (from 1 February 2004). Ownership of the Clermont coal project changed in mid 2003 when Mitsubishi Corporation and Rio Tinto Plc reached agreement to include Electric Power Development Company of Japan (J-Power) in the joint venture. The new ownership arrangements are Queensland Coal Pty Limited (50.1 per cent), Mitsubishi Development Pty Limited (34.9 per cent) and J-Power (15 per cent). The project is expected to begin coal production around 2008 and will replace production from the Blair Athol mine as its reserves are mined out. The Queensland-based mining house MIM Holdings Limited was taken over by Xstrata Plc in June 2003. Xstrata Plc acquired a 100 per cent interest in a share buy-out following shareholder acceptance of its offer of A$1.72 per share. The transaction was reported to be valued at around A$3.44 billion. Later in 2003, Xstrata Plc sold down its interests in several of its Queensland coal assets to its joint venture partners Itochu Corporation and Sumitomo Corporation of Japan for around A$555 million. These included a 20 per cent interest in the Newlands Collinsville Abbot Point (NCA) Joint Venture, a 20 per cent interest in the Oaky Creek Coal Joint Venture, and a 25 per cent interest in four Xstrata Coal Queensland Pty Ltd projects Rolleston, Wandoan, Red Rock and Pentland. Washington H. Soul Pattinson and Company Limited (Soul Pattinson) listed its 69.34 per cent owned subsidiary, New Hope Corporation Limited, on the Australian Stock Exchange in September 2003. With an associated share offer, New Hope Corporation raised almost $10 million in new development capital. The listing has reduced the combined holding of Soul Pattinson and its associate Brickworks Limited in New Hope Corporation to about 64.5 per cent. New Hope Corporation s major coal interests are a majority ownership of the Jeebropilly, New Oakleigh and New Acland open-cut coal mines in south-east Queensland, a 50 per cent stake in the coal export terminal in Brisbane, and a 40.83 per cent stake in PT Adaro which owns and operates a large open-cut coal mine in South Kalimantan, Indonesia. In December 2003, Macarthur Coal Ltd announced the completion of the purchase of joint venture interests from AMCI Australia Pty Ltd and the unification of the Coppabella and Moorvale joint ventures. The new joint venture interests in the Coppabella and Moorvale Joint Venture are beneficially owned by Macarthur Coal (73.3 per cent), CITIC Australia Pty Ltd (7.0 per cent), Marubeni Corporation (7.0 per cent), Nissho Iwai Corporation (7.0 per cent), Kawasho Corporation (3.7 per cent) and Nippon Steel Trading Co. Ltd (2.0 per cent). AMCI Australia Pty Ltd was one of the original investors in the Coppabella and Moorvale mines and remains involved in the marketing of coals from both of these operations. Macarthur Coal Ltd s share of coal production from these two operations is expected to increase by about one million tonnes per year as a result of this transaction. In mid 2003, AuIron Energy Limited, a publicly listed company, announced that it had reached agreement to acquire control of Yarrabee Coal Company Pty Ltd from Resource Management & Mining Pty Ltd. The transaction was finalised in October 2003 and the AuIron Sydney office was later relocated to Brisbane. AuIron Energy Limited formally changed its name to Felix Resources Limited in late November 2003. The Yarrabee mine produced 1.21 Mt of saleable coal in 2002 03 and the company has entered into a new three-year contract to supply 0.35 Mt of coal annually to a Japanese steel mill from April 2004. In December 2003, ownership changes were announced regarding the Millmerran Power Project (comprising the 3.5 Mtpa Commodore mine and adjacent Millmerran power station 2 x 420 megawatt units) and the Callide C power 6 Coal mining operations

plant (2 x 420 megawatt units). At that time InterGen N.V. (InterGen), owned by Bechtel Enterprises Inc. and Shell International Gas Ltd, entered into an agreement to sell half of its stake in the Queensland power industry to the China Huaneng Group (CHG). The transaction involved CHG acquiring 50 per cent of OzGen B.V., which is the holding company for InterGen N.V. s Australian assets. These assets comprise a 53.7 per cent share of the Millmerran power station and a 50 per cent share of the Callide C power station near Biloela. CHG also acquired a 50 per cent share in OzGen s operations management and trading companies. Mine developments: existing and new operations Between July 2002 and December 2003, three new open-cut coal mines commenced operations. These were the New Acland mine, located in the Clarence Moreton Basin northwest of Toowoomba, and Hail Creek and Moorvale mines, both located in the Bowen Basin, west of Mackay. These projects have required capital expenditure in excess of $500 million and provided permanent employment for around 400 persons, giving a major boost to the respective regional economies. In addition, operations at the Moura mine were extended southwards into new mining areas in the northern part of the Theodore deposits. Queensland s coal industry is now entering a more mature stage of development and while some operations have the capacity to ramp up production to meet future demand, other mine operators will need to begin the development of new projects to enable existing sales volumes to be maintained. Examples of mines that are undertaking new developments principally to maintain existing production levels include Xstrata Coal Queensland Pty Ltd at its Newlands mine, Anglo Coal Australia Pty Ltd at its German Creek operations, and Rio Tinto Coal Australia Pty Limited at its Blair Athol mine, production from which will be replaced by development of the nearby Clermont deposit. During the year, BMA commenced surface works for the fullscale development of the Broadmeadow underground mine at Goonyella, Anglo Coal Australia continued development work on the Grasstree Colliery project, a new underground coking coal mine, and the Oak Park open-cut project, while RAG Australia Coal Pty Ltd committed to the development of the Eaglefield open-cut project located within the North Goonyella mine lease area. Hail Creek mine The new Hail Creek mine, located in central Queensland s Bowen Basin approximately 35 km north-west of the township of Nebo, was officially opened on 5 November 2003, having been developed at a cost of about $460 million by the Hail Creek Joint Venture. The joint venture partners are Queensland Coal Pty Limited (92 per cent and a wholly owned subsidiary of Rio Tinto Limited), Marubeni Coal Pty Ltd (5.33 per cent) and Sumisho Coal Development Queensland Pty Ltd (2.67 per cent). The mine produces hard coking coal from seams within the Rangal Coal Measures for the export market. The first coal export shipment was made in mid- August 2003 and production is planned to ramp up to a nominal 5.5 Mtpa by 2007. Coal products are destined for use in the iron and steel industries of Japan, Korea, Taiwan, India, Europe and Brazil. Mining is to be conducted using conventional dragline and truck/shovel techniques, with a new P&H MinePro 9020 dragline under construction at the site and due to commence overburden removal in the latter part of 2004. A new 52 kilometre rail spur was constructed to link the mine into the Goonyella electrified rail system to transport coal for export to the Dalrymple Bay Coal Terminal at Hay Point, a haulage distance of about 175 km. QR (formerly Queensland Rail) is the freight manager. Moorvale mine The Moorvale deposit which contains relatively shallow coal resources in the Rangal Coal Measures is located approximately 15 km south-west of the Coppabella mine and 5 km east of the Peak Downs railway line. Practical Coal mining operations 7

completion of all major works associated with the construction of the new open-cut mine was achieved by the end of calendar year 2003, having commenced in December the previous year. First coal was mined from the site in March 2003 and prior to completion of the rail load-out facility and commissioning of the preparation plant in December 2003, the raw coal was transported by road to the Coppabella mine for treatment and loading onto the rail network. Electrification of the new rail spur between the main Goonyella Hay Point railway line and the mine site was completed in late January 2004. The mine is expected to produce about 1.5 Mt of saleable coal annually using a contract workforce of approximately 100 persons. Selective mining will allow preparation of a suite of different coal products ranging from a low volatile, high energy PCI coal, a medium ash thermal coal, and a soft coking coal. North Goonyella mine Eaglefield open-cut RAG Coal Australia Pty Ltd committed to the development of a new open-cut operation to extract some relatively shallow coal resources within the Goonyella Middle Seam, which are present over a limited area on the North Goonyella mining lease. Production will augment supply from the underground mine. Coppabella mine From the initial design capacity of 2 Mtpa, output from the Coppabella mine has been progressively scaled up over the past two years to its current level of around 4.3 Mtpa. In January 2002, the Coppabella joint venture partners were granted Mining Lease (ML) 70237 contiguous with, and to the south of, the initial mine area. This area contains additional coal resources amounting to almost 20 million tonnes of raw coal in situ. In order to access this coal, it became necessary to relocate a 6 kilometre section of both the Peak Downs Highway and the Goonyella Hay Point railway line. Civil works commenced on the relocation project in November 2002 with practical completion of the new section of the highway achieved in June 2003 and the new section of rail line becoming fully operational on 16 December 2003. New Acland mine The New Acland mine near Oakey in the Clarence Moreton Basin is designed to produce about 2 Mtpa of saleable thermal coal and commenced mining operations in August 2002. It is operated by New Acland Coal Pty Ltd (a wholly owned subsidiary of New Hope Corporation Limited) and supplies coal to the export market through the port of Brisbane as well as domestic consumers including the Swanbank power station. Proposed mine developments and advanced projects Broadmeadow mine In July 2003 BMA announced plans to develop a new underground punch longwall coal mine (to be named Broadmeadow Mine) at Goonyella in central Queensland. Cost of the project has been estimated at A$102 million and the mine will have the capacity to produce up to 3.6 Mtpa of high quality coking coal. Development commenced in the third quarter of 2003 and longwall operations are expected to start in the second half of 2005. A workforce of around 90 people will be employed to operate the mine. The coal will be washed at the Goonyella coal preparation plant and incorporated into the range of prime coking coals produced by BMA, mainly for export. Clermont project Mining of the Clermont deposit (Rio Tinto Limited, through its wholly owned subsidiary Queensland Coal Pty Limited 50.1 per cent, Mitsubishi Development Pty Limited 34.9 per cent, and Electric Power Development Company of Japan [J-Power] 15 per cent) will be phased in to replace production at Blair Athol as that resource is exhausted. The project was declared a significant project under the State Development and Public Works Organisation Act 1971 in August 2003. The environmental approvals process, which is being coordinated by the Department of State Development and Innovation, has commenced with first coal production 8 Coal mining operations

expected sometime between 2008 and 2010. The coal quality is somewhat similar to that at Blair Athol and ready market acceptance of the product is expected. Curragh North project The Curragh North coal project (formerly named the Pisces project) is located approximately 15 km north of the Curragh mine and contains more than 100 million tonnes of relatively shallow coal resources. In July 2002, Stanwell Corporation Limited sought competitive offers to develop the project, in order to provide (as an optional source of supply) thermal coal for use in its Stanwell power station. In January 2003, Wesfarmers Curragh Pty Ltd was announced as the successful tenderer to develop and manage the project, and mining lease applications were lodged in September 2003. Wesfarmers Curragh Pty Ltd is contracted to supply steaming coal to the Stanwell power station until 2016 and the development will ensure the long-term surety and price competitiveness of coal supply to the power station. Being similar in quality, the coal at Curragh North will be blended into the existing range of products presently supplied by the Curragh mine. First coal production is expected in the second half of 2005. Annual exports of metallurgical coal by Wesfarmers Curragh Pty Ltd are anticipated to increase from the 4.0 Mtpa recorded in 2002 03 to around 5.0 Mtpa when Curragh North becomes fully operational. Grasstree Colliery project Anglo Coal (Capcoal Management) Pty Limited s Grasstree Colliery project is a new underground longwall mine currently under development in order to access prime coking coal reserves that are located down-dip of the present Southern Colliery workings on the main German Creek mining lease. The project commenced in early 2001 with the construction of two vertical shafts (one for ventilation and one for personnel and materials) to the German Creek Seam. Both shafts have now been sunk to seam level and a limited amount of in-seam development has been completed. Installation of the longwall mining equipment is scheduled to occur during 2006, and run-of-mine (ROM) coal will be washed at the German Creek preparation plant. When fully operational, the annual production of saleable prime coking coal from the new mine is planned to ramp up progressively to 3 5 Mtpa. Kennedy project During 2003, BMA commenced a major review of its Kennedy project (formerly Humboldt) located in the southern portion of the Blackwater mining leases. This involved a substantial amount of drilling to obtain additional information on coal quality and geological structure as well as providing further geotechnical and groundwater information particularly for the Tertiary basalts that cover much of the area. The work was incorporated into a pre-feasibility study for the commencement of open-cut mining in this part of the mine area. Lake Lindsay (formerly Girrah) project In January 2003, following the completion of a competitive tender process, Wesfarmers Limited announced that it had reached an agreement to sell its Girrah coal deposit to Anglo Coal (German Creek) Pty Limited and Mitsui German Creek Investments Pty Limited, the joint owners of the German Creek mining leases. The deposit is favourably situated with respect to operations at the German Creek mine, being located approximately 16 km south-east of the German Creek East open-cut and adjacent to the Oak Park deposit. The new owners have renamed the deposit as Lake Lindsay, the name formerly used in previous exploration and assessment projects by the former Department of Mines and previous tenure holders. Monto project Macarthur Coal Ltd and joint venture partner Burnett Coal Pty Ltd plan to jointly develop a small open-cut mine south of Monto with an initial capacity of up to 1 Mtpa. Activities were suspended in August 2003 due to unfavourable market conditions at that time. Coal mining operations 9

Newlands Northern underground and Suttor Creek projects In the northern Bowen Basin, Xstrata Coal Queensland Pty Ltd is planning to commence mining within the Suttor Creek deposit (located about 18 km south of the Newlands coal preparation plant and load-out facility) by the second half of 2004. The company is also developing the Northern underground mine to replace production from the Southern underground mine upon its anticipated closure in late 2005. Surface works for this new punch longwall mine have been completed and underground development is to commence in the first quarter of 2004. The Newlands mine, which commenced operations in the latter part of 1983 at a rate of about 4 Mtpa, achieved a total of 100 Mt of coal exported through the port of Abbot Point in September 2003. The mine exported 8.27 Mt in 2002 03. Rolleston project In February 2004, the board of Xstrata Plc approved the development of the Rolleston open-cut coal project in the south-western sector of the Bowen Basin (Mining Lease 70307) at an estimated cost of $291 million. This decision followed the evaluation of an additional 50 000 tonne bulk sample which was taken in late 2003 for further testing by potential customers. Xstrata Coal Queensland Pty Ltd has a 75 per cent share, and its partners, Sumitomo Corporation and Itochu Corporation, each have a 12.5 per cent interest. The development of the mine involves construction of a new 110 kilometre rail connection to the Blackwater railway line near BMA s Blackwater Mine load-out facility. This new rail infrastructure, the Bauhinia Rail Project, will be built, owned and operated by QR, for an estimated capital cost of $230 million. located about 15 km north-east of Dysart. The deposit is contained within the Rangal Coal Measures and the company proposes to produce metallurgical coals for export through the Dalrymple Bay Coal Terminal. Mine closures The Ebenezer open-cut mine, located in the West Moreton Coalfield near Ipswich, ceased production in December 2002 and was placed under care and maintenance. The mine, which is wholly owned by Idemitsu Kosan Company (Japan), commenced production in 1986 87. In 2001 02, the mine employed about 120 persons and produced about 1.6 Mt of coal for use in the nearby Swanbank power station and for export. Rising costs, unfavourable currency movements and falling thermal coal prices contributed to the closure. Coal supplied to the Swanbank power station has been substituted from other nearby mining operations (Jeebropilly, New Oakleigh) and from the New Acland mine west of Toowoomba. New Hope Corporation closed its Swanbank open-cut mine in July 2003, ending an era of coal mining within the Ipswich coalfield that has spanned about 160 years. Ipswich coal has provided the major energy base for general industry and electricity generation in south-east Queensland since the colonial times of the 1840s. Production has been transferred to operations at the company s mines on the Walloon Coal Measures near the townships of Rosewood (New Oakleigh and Jeebropilly mines) and Oakey (New Acland mine). Vermont project In the second half of 2003, Bowen Basin Coal Pty Ltd initiated the environmental approvals process that will involve the completion of an environmental impact statement (EIS) for the development of a new 2.5 Mtpa open-cut coal mine centred on the Vermont coal deposit, 10 Coal mining operations

Exploration and resources Coal exploration and development tenures During 2002 03 coal exploration expenditure in Queensland on both production and exploration tenements increased markedly to $55.3 million (Australian Bureau of Statistics Cat. no. 8412.0), an increase of more than 60 per cent over the $34.1 million spent during the previous year (Figure 6). The Department of Natural Resources, Mines and Energy received 43 EPC applications during 2002 03 compared with the 65 applications lodged during 2001 02 (Figure 7) and 47 were granted, bringing the total number of EPCs granted and in force as of 30 June 2003 to 131 (Figure 8). Collectively, these 131 EPCs covered a total area of 12 549 sub-blocks (about 39 000 sq. km) compared with an area of 6535 sub-blocks (approximately 20 000 sq. km) for the 95 EPCs that were current as of 30 June 2002. As of 1 January 2004, the number of EPCs granted and in force had risen further to a total of 138 with a further 53 applications under assessment by the department. Three mineral development licences (MDLs) for coal were granted during 2002 03 and two applications were lodged. Twelve mining lease applications for coal were lodged with the department during 2002 03 and seven were granted. Seven applications were in connection with existing mines at Kestrel (2), Foxleigh (2), Norwich Park, Jellinbah East and Callide. The remainder were associated with new coal projects at Moorvale (now operating), Oak Park and Rolleston as well as Millenium Coal Pty Ltd s project west of Poitrel. New coal A$ millions Number 60 50 40 30 20 10 0 70 60 50 40 30 20 10 0 Coal exploration expenditure in Queensland 1993 94 Exploration permits for coal (EPCs): applications received 1993 94 1994 95 1994 95 1995 96 1995 96 1996 97 Source: Australian Bureau of Statistics 1996 97 1997 98 1997 98 Figure 7: Number of applications received for exploration permits for coal (EPCs) 1998 99 1998 99 1999 00 1999 00 2000 01 Figure 6: Private expenditure on coal exploration in Queensland 2000 01 2001 02 2001 02 2002 03 2002 03 Top: Seismic surveying, Bowen Basin (Photograph courtesy of Velseis Pty Ltd) Exploration and resources 11

mining leases were granted in 2002 03 for mining at Moorvale, Norwich Park, South Marshmead (Blackwater area) and Rolleston. Coal exploration activity The Queensland Government s staged release of the Central Queensland Coal Area, Restricted Area 55 (RA55) which commenced in 1993 sparked considerable Australian and international interest at the time. Subsequent exploration has led to the discovery of a number of previously unknown, small-to-medium sized coal deposits throughout the Bowen Basin, mainly in the Rangal Coal Measures. Some of these coal deposits have since been developed into operating mines. More than ten years on from this government initiative, the level of coal exploration activity within the state is now at an unprecedented high. Most of the interest is still centred on the Bowen Basin, which was the focus of nearly 70 per cent of the EPC applications received by the department in 2002 03. Between July and September 2003, the department conducted another airborne geophysical survey over an area of approximately 23 700 sq. km within the central portion of the Bowen Basin. This survey extended the northern survey that was undertaken in the basin in 2002. The new survey collected about 65 000 line km of magnetic and radiometric data, at a line spacing of 400 metres and a height of 80 metres. The digital data set was publicly released in November 2003 and plans are underway to continue with further surveys to cover the southern parts of the basin. In the central Bowen Basin, Anglo Coal Australia Pty Ltd also undertook a variety of geophysical surveys during the year at a number of its mine sites and exploration areas. This work included extensive 2D seismic surveys in the northern portion of the the Moura deposits, 3D seismic surveys over future longwall blocks at the Moranbah North mine, as well as ground magnetics and trial surface resistivity surveys over some potential underground resource blocks within the German Creek mining lease which sought to identify igneous intrusions. To the north of German Creek and west of the Norwich Park mine, BMA undertook further 2D Mini-Sosie seismic surveys in the Picardy exploration area (EPC 718) during 2003, having previously identified some shallow resource blocks of low volatile coal in the area. In the northern Bowen Basin, Xstrata Coal Queensland Pty Ltd focused its activities on pre-development planning of the Newlands northern underground and Suttor Creek open-cut mining projects. Additional exploration work by the company in this region involved some 2D Mini-Sosie seismic surveys together with field mapping to identify potential targets of shallow coal that could be developed as satellite operations of Collinsville and Newlands mines. QCoal Pty Ltd, a Brisbane-based company, also conducted a considerable amount of exploration in the north Bowen Basin (EPC 586 and EPC 639) during the year and has identified coking and thermal coal resources at shallow depth in the Moranbah Coal Measures. The deposit is located adjacent to the Bowen Developmental Road and the Newlands to Abbot Number 200 175 150 125 100 75 50 25 0 Exploration permits for coal (EPCs): current and applications pending 1993 94 1994 95 1995 96 1996 97 Current EPCs Applications pending Figure 8: Exploration permits for coal (EPCs): current and applications pending (at 30 June) 1997 98 1998 99 1999 00 2000 01 2001 02 2002 03 12 Exploration and resources

Point railway line, about 6 km to the south of the township of Collinsville. The company is continuing investigations into the feasibility of developing a new mine. In the southern portion of the basin, Wesfarmers Curragh Pty Ltd continued its evaluation of the Curragh North deposit by undertaking an infill airborne geophysical survey to supplement the departmental regional survey completed in September 2003, and conducting a number of surface resistivity surveys over the northern portion of the deposit. The company also completed an extensive resource assessment drilling program during the year, to further evaluate the initial mining area. Other seismic surveys completed during the 2003 field season were conducted on behalf of New Hope Corporation in the north Bowen Basin west of the Burton mine and for Macarthur Coal in the eastern sector of the basin, south of the Peak Downs Highway. Other smaller companies including Millennium Coal Pty Ltd, Aquila Coal Pty Ltd and Nebo Central Coal Pty Ltd have also been actively involved during the year, exploring the Rangal Coal Measures in the region extending southwards from the Burton mine to the Poitrel area where the coal seams have potential to yield a range of coking, PCI and thermal coal products. In the far south-west of the basin, Macarthur Coal Ltd undertook some scout drilling in the Springsure-Rolleston area following previous field mapping in the region that had indicated some potential for the presence of shallow occurrences of Bandanna Formation coals. Also in this region (EPC 800), the Foxleigh Joint Venture partners completed a small scout drilling program during the year, seeking to locate shallow occurrences of coal in the Reids Dome beds. As of 1 January 2004, virtually all of the prospective areas for coal exploration within the Surat and Moreton basins were either held under granted EPCs or were the subject of EPC applications. In these areas, exploration appeared to be targeted at locating satellite deposits near operating mines or identifying resources that could supply high volatile thermal coal either for export (subject to the availability of suitable infrastructure) or for local power generation in the medium to longer term. Native title Land access for mineral exploration has been a major focus of the Queensland Government in 2002 03 and will continue to be a high priority. The Native Title and Indigenous Land Services (NT&ILS) group within the department provides a wide range of specialist skills and expertise, which is necessary for dealing with native title issues in Queensland. NT&ILS is the lead agency in the state for all native title issues, including policy and legislation development, facilitation and negotiation of the right-to-negotiate processes and indigenous land use agreements (ILUAs), and resolution of issues in relation to mining and petroleum tenures. Following a review of native title procedures for grants of exploration and mining tenures in consultation with key stakeholders, the Mineral Resources Act 1989 was amended to allow the state to revert to the right-to-negotiate procedure of the Native Title Act 1993 (Cth). Improved procedures The transition from a state regime to the Commonwealth procedure means that the expedited procedure can be adopted to enable grants of exploration permits subject to native title protection conditions. Developed through consultation with the Queensland Resources Council and the Queensland Indigenous Working Group, the conditions prescribe post-grant procedural steps to involve native title parties in protecting significant cultural sites from impacts of exploration. These conditions are intended to ensure that the procedure works effectively by minimising objections to its use. The first applications to be dealt with under this procedure were advertised in November 2003. Unless the parties negotiate alternative agreements, new applications for exploration permits will proceed under the expedited procedure. Progression of earlier applications is Exploration and resources 13

proceeding through the former alternative state provisions or via ILUAs. Queensland has developed particular expertise in these agreements, having close to 60 per cent of the total number of registered ILUAs in Australia. The new system has opened the door to more exploration in Queensland by giving mining companies the certainty they need, while continuing to protect Indigenous interests. More detailed information is available from the Office of the Director General, Department of Natural Resources, Mines and Energy: contact Native Title and Indigenous Land Services, telephone +61 7 3896 3354. Queensland coal inventory 1 Estimates of the amount of raw coal in situ for Queensland s coal basins have been compiled from available company information by the department to assist government with strategic planning as well as land and mineral tenure management for the state. The tonnage estimates, presented on a basin-wide basis in Table 2, have been derived by aggregating estimates of yet-to-be-mined resources and/or reserves at operating coal mines, with estimates of identified coal contained within other undeveloped coal deposits within the state. Details of the tonnage estimates for each mine or deposit contributing to the aggregate figures presented in the table were presented by Mutton (2003). Base information for the compilation has been obtained from a variety of sources and falls into two broad groups comprising the following: Estimates which have been publicly reported by companies as complying with the Australasian Joint Ore Reserves Committee (JORC) Code for Reporting of Mineral Resources and Ore Reserves 1999. Estimates obtained from information supplied to the department by exploration and mining companies, but not nominated as being compliant with JORC requirements. Generally, companies provide estimates within this group to the department to comply with statutory requirements for exploration reporting. These estimates have been prepared in accordance with accepted practice, following the guidelines described by Galligan and Mengel (1986). It is important to note that estimates from these two groups are derived using different parameters and, as such, may not be directly comparable. Consequently, as the rounded aggregate totals in Table 2 contain estimates from both groups, the information provides a guide only to the state s inventory of identified coal, and is not intended to demonstrate or imply potential commercial viability. Only resources classified as Measured or Indicated categories, as defined under either the JORC Code or in accordance with Galligan and Mengel, are included in the inventory. Estimates of Inferred coal resources, which would add significantly to the total coal inventory tonnage, are not included. Of the state s coal inventory (Table 2), Permian coals within the Bowen Basin in central Queensland account for approximately 70 per cent of the estimated total, while Mesozoic coals found mainly in the Clarence Moreton, Surat, Callide and Tarong basins make up the remainder. Shallow coal potentially amenable to open-cut mining makes up about 55 per cent of the inventory, with the remaining 45 per cent present at greater depths. Thermal coals (including PCI coals) represent about 65 per cent of the inventory, with the remainder being identified as coking coal. The Permian coal measures contain almost 100 per cent of the identified coking coal resources. Approximately 40 per cent of the coal inventory occurs at or within close proximity to operating mines within the state. The coal inventory total of approximately 33 billion tonnes of raw coal in situ represents a decrease of about 5 billion tonnes on the total figure previously reported by the department. The main reason for this reduction is the change by many companies in reporting their resource and reserve estimates to comply with the JORC Code. Significant reductions in tonnages are largely attributed to the decrease or exclusion of underground resources, which under JORC requirements are presently not considered to have 1 Modified extract from Queensland coals, 14th edition, 2003 14 Exploration and resources

Queensland coal inventory summary (million tonnes) 1 Period/Basin Coking coal Thermal coal 2 Total Open-cut Underground Open-cut Underground M+I 3 M+I M+I M+I M+I Permian Bowen 4 114 7 079 3 227 6 561 20 981 Galilee - - 1 678 530 2 208 Subtotal 4 114 7 079 4 905 7 091 23 189 Mesozoic Callide - - 970-970 Clarence Moreton - - 2 250-2 250 Ipswich - - 4 561 565 Laura - 47 - - 47 Mulgildie - - 122-122 Styx - - - 4 4 Surat - - 4 198-4 198 Tarong - - 1 384-1 384 Subtotal - 47 8 928 565 9 540 Total 4 114 7 126 13 833 7 656 32 729 Table 2 1 raw coal in situ 2 includes PCI coals 3 M+I = Measured + Indicated status Note: The inventory totals comprise estimates reported by companies as being compliant with the JORC Code as well as estimates supported by other information supplied to the department which have not specificially been stated as being JORC compliant. Estimates from these two groups are derived using different parameters and may not be directly comparable. Since the rounded aggregate totals in the table contain estimates from both groups, the information provides a guide only to the state s coal inventory and is not intended to demonstrate or imply potential commercial viability. reasonable prospects for eventual economic extraction or which have been reclassified as Inferred resources. References Galligan, AG & Mengel, DC 1986, Code for reporting of identified coal resources and reserves, Queensland Government Mining Journal, vol. 87, pp. 201 03. Mutton, AJ (compiler) 2003, Queensland coals, 14th edition, Department of Natural Resources, Mines and Energy, Brisbane. A copy of the JORC Code can be obtained from <www.jorc.org/main.php>. Exploration and resources 15

Queensland coal Figure 9: The location of known coal measures within Queensland 16 Exploration and resources

Central Queensland coal Figure 10: The locations of operating coal mines and undeveloped coal deposits within central Queensland Exploration and resources 17

South-east Queensland coal Figure 11: The locations of operating coal mines and undeveloped coal deposits within south-east Queensland 18 Exploration and resources

Transport and shipping An extensive rail network links Queensland s coal mines to six coal export terminals at four ports on the state s eastern seaboard, and to domestic coal users. Figures 9, 10 and 11 show the locations of the rail network and ports in relation to the operating mines and coal resources. The Queensland Government has continued its commitment to develop rail and port capacity ahead of increasing demand for domestic and export coal. Coal rail network QR s coal network links over 30 coal mines in Queensland to six coal export terminals as well as to domestic coal users. For coal haulage operations, the interconnected system is divided into five rail systems comprising approximately 2000 km of rail line, of which about 70 per cent is electrified. The five rail systems that make up the network are (from north to south): The Newlands rail system is a non-electrified line connecting coal mines in the northern Bowen Basin to the Abbot Point coal terminal, north of Bowen. Trains operating on this system typically haul about 4600 tonnes of coal. The Goonyella rail system is an electrified line connecting coal mines in the central Bowen Basin (i.e. Gregory Mine in the south, North Goonyella Mine in the north and Blair Athol Mine in the west) to the Dalrymple Bay and Hay Point coal export terminals, south of Mackay. Trains operating on this system typically haul about 9600 tonnes of coal. The Blackwater rail system is an electrified line connecting coal mines in the southern Bowen Basin, from the Gregory mine in the north and Blackwater mine in the south, to the RG Tanna and Barney Point coal export terminals at Gladstone, and to domestic coal users in the Rockhampton area. Trains operating on this system typically haul about 7200 tonnes of coal. The Moura rail system is a non-electrified line connecting the Moura, Callide and Boundary Hill mines to the RG Tanna and Barney Point coal export terminals at Gladstone. It also links the three mines with the Gladstone power station and other domestic users in the Gladstone area. Trains operating on this system typically haul about 6000 tonnes of coal. The Surat/West Moreton rail system is a non-electrified line connecting coal mines in the eastern Surat Basin and the Moreton Basin, west of Brisbane, to the Fisherman Islands coal export terminal at the port of Brisbane and the Swanbank power station. Trains operating on this system typically haul about 1900 tonnes of coal. In 2002 03, QR railed a record 139 Mt, compared with 135 Mt in 2001 02. During 2003 04, QR expects to further increase railings of coal to more than 143 Mt. The increased railings were achieved through QR improving the productivity of its fleet and working closely with the coal industry. Top: Berthing and ship-loading facilities, Dalrymple Bay Coal Terminal (Photograph courtesy of Prime Infrastructure Management Limited) Transport and shipping 19

The strong global demand for Australian coals is opening up expansion opportunities for many Queensland coal miners. QR are now targeting a haulage task of more than 194 Mta within five years in Queensland alone. QR already has plans in place to meet this anticipated strong growth and major locomotive and wagon projects have already been committed. Coal customers are set to benefit from the substantially lower freight rates that have recently been offered on the Goonyella and Blackwater corridors. These reflect the lower haulage costs that QR expects to achieve from its productivity improvement initiatives that are currently underway or planned on those corridors. Contact: During 2002 03, a record 129.22 Mt of coal was exported from the six terminals, increasing from 123.11 Mt in 2001 02. The Dalrymple Bay, Hay Point and RG Tanna terminals collectively handled more than 108.8 Mt, or approximately 84 per cent of Queensland s coal exports, in this period. Total handling capacity of the ports continued to increase, with expansions at Dalrymple Bay and RG Tanna terminals progressing on schedule. Information on each of the coal export terminals, and developments that have occurred or are planned, is presented on the following pages. Table 3 summarises the main specifications and capacities of each terminal, and the coal exports handled in 2002 03. The Gladstone Port Authority was renamed the Central Queensland Ports Authority commencing 1 July 2004. General Manager Coal, Coal & Freight Services Level 10 Rail Centre 1, 305 Edward Street Brisbane Qld 4000 Australia Phone: +61 7 3235 1470; Fax: +61 7 3235 2598 Email: qr.coal@qr.com.au Web site: www.qr.com.au Export terminals Coal destined for the export market is handled through six coal terminals at four deepwater ports located along the Queensland coast. From north to south, these are the port of Abbot Point, the port of Hay Point (incorporating the separate Dalrymple Bay and Hay Point coal terminals), the port of Gladstone (incorporating the RG Tanna and Barney Point terminals) and the port of Brisbane (Fisherman Islands). 20 Transport and shipping

Abbot Point Ownership Operator Berths Maximum vessel size Annual capacity Main users Expansion plans The Ports Corporation of Queensland Abbot Point Bulkcoal Pty Ltd One 200 000 dead weight tonnes (dwt) 12 Mtpa (nominal) Newlands and Collinsville mines Can expand to 16 Mt annual capacity, and to >24 Mtpa Brisbane (Fisherman Islands) Ownership Queensland Bulk Handling Pty Ltd Operator Queensland Bulk Handling Pty Ltd Berths One Maximum vessel size 90 000 dwt Annual capacity 5 Mtpa Main users New Hope Coal Australia, Ebenezer (ceased production December 2002) and Wilkie Creek mines Expansion plans None at present Contact details Abbot Point Bulkcoal Pty Ltd PO Box 207 Bowen Qld 4805 Phone: +61 7 4786 0300 Web site: www.pcq.com.au Barney Point (Gladstone) Ownership Gladstone Port Authority Operator Gladstone Port Authority Berths One Maximum vessel size 90 000 dwt (fully loaded) or 150 000 dwt (part loaded) Annual capacity 5 Mtpa Main users Kestrel, Moura, Gregory, Blackwater, Jellinbah East, Curragh, Ensham, Oaky Creek, Yarrabee, Peak Downs, Norwich Park and Cook mines (potentially the same as RG Tanna coal terminal) Expansion plans Expansion of capacity is not planned at the present time Contact details Gladstone Port Authority Yarroon Street Gladstone PO Box 259 Gladstone Qld 4680 Phone: +61 7 4976 1333 Fax: +61 7 4972 3045 Web site: www.gpa.org.au Contact details Queensland Bulk Handling Pty Ltd 3 Bulk Terminal Drive Fisherman Islands PO Box 348 Wynnum Central Qld 4178 Phone: +61 7 3895 6500 Fax: +61 7 3895 1170 Web site: www.portbris.com.au Dalrymple Bay Ownership The Ports Corporation of Queensland In September 2001, the Queensland Government awarded the tender for the long term lease of the Dalrymple Bay coal terminal (DBCT) to a consortium led by investment bank Babcock & Brown. Prime Infrastructure, a public company that was established by Babcock & Brown following its purchase of the lease, now controls the terminal under the lease agreement. Operator Dalrymple Bay Coal Terminal Pty Ltd The operator is owned by some of the coal exporters who use the terminal Blair Athol Coal Pty Ltd, Capricorn Coal Management Pty Ltd, Moranbah North Coal (Management) Pty Ltd, BHP Mitsui Coal Pty Ltd, Xstrata Plc and Burton Coal Pty Ltd. Berths Extended berths for three vessels with three ship loaders Maximum vessel size 230 000 dwt Annual capacity 55.5 Mtpa Transport and shipping 21

Dalrymple Bay (cont d) Main users Blair Athol, Burton, Coppabella, German Creek, Goonyella/Riverside, Foxleigh, Hail Creek, Moorvale, Moranbah North, North Goonyella and Oaky Creek mines Expansion plans Stage 6 of the terminal s expansion, involving the construction of a third ship-loader and a new berth (Berth 3), mooring dolphins and conveyor galleries, commenced in April 2002 and was completed in June 2003 at a cost of approximately $115 million. These works raised the terminal s rated throughput capacity from 45.5 Mtpa to 55.5 Mtpa. Prime Infrastructure has developed a Master Plan that forms the basis for future expansion of DBCT and already covers expansion of the nominal capacity to 74 Mtpa. Contact details Dalrymple Bay Coal Terminal Pty Ltd Mail Service F 283 Mackay Qld 4740 Phone: +61 7 4943 8444 Web sites: www.pcq.com.au www.primeinfrastructure.com.au Hay Point Ownership Central Queensland Coal Associates Joint Venture Operator Hay Point Services Pty Ltd Berths Two, allowing simultaneous loading Maximum vessel size 180 000 dwt (No.1 berth), 230 000 dwt (No. 2 berth) Annual capacity 34 Mtpa Main users Goonyella, Peak Downs, Saraji, Norwich Park, Gregory/Crinum and South Walker Creek mines Expansion plans No further expansion is planned at the present time Contact details Hay Point Services Pty Ltd Mail Service 283 Mackay Qld 4740 Phone: +61 7 4943 8222 Web site: www.pcq.com.au RG Tanna (Gladstone) Ownership Gladstone Port Authority 1 Operator Gladstone Port Authority Berths Two, allowing simultaneous loading Maximum vessel size >220 000 dwt each berth Annual capacity 40 Mtpa Main users Kestrel, Moura, Gregory, Blackwater, Jellinbah East, Curragh, Ensham, Oaky Creek, Yarrabee, Peak Downs, Norwich Park and Cook mines Expansion plans The RG Tanna Coal Terminal Expansion Project was officially completed in June 2003 at a cost of $80 million, increasing its throughput capacity from 30 Mtpa to 40 Mtpa. Gladstone Port Authority has plans in place to expand coal export capacity to more than 60 Mtpa. Contact details Gladstone Port Authority 1 Yarroon Street Gladstone PO Box 259 Gladstone Qld 4680 Phone: +61 7 4976 1333 Fax: +61 7 4972 3045 Web site: www.gpa.org.au 1 The Gladstone Port Authority was renamed the Central Queensland Ports Authority commencing 1 July 2004 22 Transport and shipping

Queensland coal ports Port/Terminal Coal exports Annual Hourly Maximum Dredged Berth Berth 2002 03 loading loading vessel channel length (lwd) capacity rate size (lwd 2 ) (nominal) (Mt) (Mtpa) (tph) (dwt 1 ) (m) (m) (m) Abbot Point Abbot Point 12.79 12.0 4 600 200 000 17.2 264 19.4 Brisbane Fisherman Islands 3.56 5.0 3 000 90 000 # 13.5 317 13.5 Gladstone Barney Point 4.04 5.0 2 000 90 000 15.5 320 15.0 RG Tanna 34.15 40.0 No. 1* 4 000 >220 000 17.0 380 18.8 No. 2* 4 000 >220 000 17.0 370 18.8 No. 3* 4 000 >220 000 17.0 390 18.8 Hay Point Dalrymple Bay 42.89 55.5 7 200 230 000 13.1 No.1* 662 17.9 No.2* 662 18.3 No.3 250 18.9 Hay Point 31.79 34.0 No.1 5 000 180 000 13.0 343 16.4 No.2 6 000 230 000 13.0 366 16.7 Total 129.22 151.5 Table 3 Notes 1 2 dead weight tonnes low water depth # Or up to 150 000 dwt partly loaded * Berths adjoin at this port Transport and shipping 23

The electricity industry Queensland power generation utilities Three separate Queensland Government owned corporations (Stanwell Corporation Ltd, Tarong Energy Corporation Ltd and CS Energy Ltd) and a number of private power producers supply the electricity produced in Queensland at several power stations. These include coal-fired power stations located (from north to south) at Collinsville, Stanwell, Gladstone, Callide, Tarong, Swanbank and Millmerran. In addition, a new 750 MW coal-fired power station is to be built in south-east Queensland at Kogan Creek, with work planned to start in the latter part of 2004. Table 4 lists details of the output capacities and amount of coal purchased by the Queensland power stations. Table 5 shows the typical quality specifications of the coals purchased by and consumed in each power station. Callide The Callide power station, located near the township of Biloela in central Queensland, has a generation capacity of 1720 MW and is operated by CS Energy Ltd. It is a minemouth plant based on the large resources of shallow coal in the Callide deposits controlled by Anglo Coal Australia Pty Ltd. The complex comprises the 700 MW Callide B station (2 x 350 MW units); the 120 MW Callide A station (4 x 30 MW units) which has been taken out of service; Queensland power stations coal fired capacity and coal purchases Power Installed Coal Coal sources station capacity purchases (mines) (Mwe 1 ) (Mt) 01 02 02 03 received received Callide A 2 120 0.017 - Callide Callide B 700 3.088 2.753 Callide Callide C 900 2.817 2.404 Callide Collinsville 192 0.427 0.309 Collinsville Gladstone 1 680 4.647 3.973 Blackwater, Callide, Curragh, Ensham, Gregory-Crinum, Jellinbah East, Rolleston Millmerran 840 0.246 1.691 Commodore Stanwell 1 440 3.532 3.431 Blackwater, Burton, Cook, Curragh, Ensham Swanbank B 500 1.157 0.903 Ebenezer, Jeebropilly, New Acland, New Hope, New Oakleigh Tarong 1 400 5.225 6.194 Meandu, New Acland 1 2 Total 7 772 21.157 21.659 megawatts of electrical power Callide A withdrawn from service in 2002 Table 4 Top: Millmerran Power Station (Photograph courtesy of Millmerran Operating Company Pty Ltd) 24 The electricity industry

Typical coal quality supplied to Queensland power stations Power Specific Volatile station energy (GJ/t 1 )matter (%) Moisture (%) Sulphur (%) Ash (%) Callide 19 22 15.6 0.3 21 Collinsville 24.2 16 8 0.7 18.5 Gladstone 19 29 17 29 6 20 0.2 0.8 10 20 Millmerran 17.6 33 9 0.45 35 Stanwell 26 30 17 30 8 10 0.4 0.6 12 18 Swanbank B 24.8 35 10.5 0.5 17 Tarong 19.6 23.5 12 0.35 28 Table 5 1 gigajoules per tonne, which is equivalent to megajoules per kilogram (MJ/kg) Note: all figures on an as received basis and the 900 MW Callide C station (2 x 450 MW supercritical units). Callide C is owned by a joint venture between CS Energy Ltd and InterGen 50 per cent Callide Energy Pty Ltd (subsidiary of CS Energy Ltd) and 50 per cent IG Power Callide Ltd. Callide A station, an old 120 MW plant, was retired from service in 2002. In December 2003, InterGen announced the sale of half of its Australian power generation interests to the China Huaneng Group (CHG). The transaction involved CHG acquiring 50 per cent of OzGen B.V., the holder of InterGen s Australian assets. Collinsville In September 2002, NRG Energy Inc. completed the sale of its 50 per cent interest in the 192 MW Collinsville power station to its existing partner, a subsidiary of Transfield Services Limited. Transfield Services is now the 100 per cent owner and operator of the 35-year-old coal-fired power station located approximately 80 km west of the coastal township of Bowen. Gladstone The Gladstone power station provides 1680 MW of base/intermediate load from 6 x 280 MW turbines, largely to supply local industries and domestic users in the Gladstone area. The station was completed in 1982 and in 1994 was sold by the Queensland Government to its present owners, which include Comalco Aluminium Limited (41.13 per cent), NRG Energy, Inc. (37.50 per cent), SLMA GPS (8.5 per cent), Ykk GPS Queensland (4.75 per cent) and Mitsubishi (7.13 per cent). NRG Gladstone Operating Services operate the plant. Electricity output from the power station is purchased and marketed by Enertrade, a wholesale energy trader owned by the Queensland Government. Under the arrangement with the owners, Enertrade bids the entire output of the Gladstone power station into the electricity market. This effectively preserves the position of the owners and operators of the power station, as well as preserving the state s rights to that part of the output retained by the state under the terms of sale of the power station. Millmerran The 840 MW Millmerran power station and adjacent Commodore mine, south-west of Toowoomba, were officially opened in January 2003. Cost of the total development including both the mine and power station was an estimated $1.5 billion. The first 420 MW unit was completed in September 2002, while construction of the second unit was completed in late 2002. The power station is operated by the Millmerran Operating Company Pty Ltd (a wholly owned subsidiary of InterGen [Australia] Pty Ltd) on behalf of Millmerran Power Partners. The Millmerran plant is among the first in Australia to use supercritical boiler technology and air-cooled system design. Supercritical boilers increase plant efficiency compared to conventional coal-fired boilers. Air cooling was adopted to The electricity industry 25

reduce water consumption to a fraction of that used by conventional plant. Millmerran is the first major supercritical power station in Australia specifically designed to burn environmentally friendly coals from the Walloon Coal Measures of the Surat and Clarence Moreton basins of southern Queensland. As outlined in the earlier section, Coal mining operations, in December 2003 InterGen announced changes in the ownership of the Millmerran Power Project (comprising the 3.5 Mtpa Commodore Mine and adjacent Millmerran power station) and the Callide C power station. At that time InterGen, owned by Bechtel Enterprises Inc. and Shell International Gas Ltd, entered into an agreement to sell half of its stake in the Queensland power industry to the China Huaneng Group (CHG). The transaction involved CHG acquiring 50 per cent of OzGen B.V., which is the holding company for InterGen N.V. s Australian assets. These assets comprise a 53.7 per cent share of the Millmerran power station and a 50 per cent share of the Callide C power station near Biloela. CHG also acquired a 50 per cent share in OzGen s operations management and trading companies. Stanwell The Stanwell power station, located 22 km west of Rockhampton, is owned and operated by Stanwell Corporation Ltd. The fully automated coal-fired power station became fully operational in 1996, with an original capacity of 1400 MW (4 x 350 MW units), and modifications have allowed the station to reach a total output of 1440 MW. In January 2003, Stanwell Corporation announced an agreement with Wesfarmers Curragh Pty Ltd, under which Wesfarmers will develop Stanwell s Pisces coal resource. The deposit, renamed Curragh North, is located 10 km from Wesfarmers Curragh mine, a major supplier of coal to the power station. The resource will be developed to ensure a secure supply of domestic steaming coal, similar to the current Curragh mine product, to the power station until 2025. Swanbank CS Energy Ltd also owns and operates the Swanbank power station near Ipswich. The facility has a 480 MW coal-fired facility (Swanbank B), with additional capacity provided by the 385 MW gas-fired Swanbank E station, completed in November 2002. This has replaced the capacity previously provided by the mothballed 396 MW Swanbank A coal-fired station. The coal supply is sourced from mines in the Clarence Moreton and Surat basins and railed or trucked to the site. In addition to its major gas supplies sourced via pipeline from the Scotia gas field near Roma (a coal seam methane project), Swanbank E power plant also burns gas produced at the adjacent land-fill waste site operated by Thiess Services Pty Ltd. In 2002 03 this renewable energy source provided around 150 terajoules 1 of energy, equivalent to the energy contained in approximately 6000 tonnes of coal (as received). Tarong The 1400 MW Tarong power station is a mine-mouth operation owned and operated by Tarong Energy, a Queensland Government owned corporation. It is located 180 km north-west of Brisbane, near the township of Yarraman. The power station became fully operational in 1986, and uses coal supplied by the nearby Meandu mine, which is owned by Rio Tinto Coal Australia Pty Limited. The Tarong North project is a 450 MW power station sited adjacent to the Tarong power station and was completed in July 2003. The estimated cost of the project was approximately $650 million. The supercritical plant is more efficient than older plant because of the much higher steam pressures (25 MPa 2 compared to 17 MPa) and higher temperatures (566 C compared with 538 C) in the steam cycle. 1 1 terrajoule = 1 x 10 12 joules 2 megapascal 26 The electricity industry

The Tarong North power station is owned (50/50) by a joint venture of Tarong Energy and TM Energy (Aust) Pty Ltd which, in turn, is owned by Tokyo Electric Power Company (70 per cent) and Mitsui & Co. Ltd (30 per cent). The combined coal requirement for both Tarong and Tarong North stations is about 7 Mtpa, sourced mainly from the nearby Meandu mine. Tarong Energy is investigating the development, including the associated rail transport infrastructure, of its Glen Wilga coal deposit in the Surat Basin near Chinchilla, as an alternative longer term coal supply option for the power station. Kogan Creek The proposed Kogan Creek mine-mouth power station project comprises a single 750 MW supercritical unit and a new open-cut coal mine on the adjacent Kogan Creek coal deposit, located near Chinchilla in south-east Queensland. The project is wholly owned by CS Energy Ltd and will be the next large-scale base load power generation project under the Queensland State Government s Clean Energy Policy. This $1.1 billion project was given final approval to proceed to construction by the Queensland Government in May 2004, and is scheduled to come on-line towards the end of 2007. When operational, the Kogan Creek Power Project is expected to have a permanent workforce of about 130 persons, of which about 70 persons will be employed in the power plant and about 60 persons in the coal mine. During construction, employment numbers are expected to reach more than 1000. The electricity industry 27

Coal research activities Research and development into all aspects of coal production and utilisation is widely supported within Australia by the coal industry, governments and universities. Much of the research support and implementation is managed through the Commonwealth Government Cooperative Research Centres (CRC) program and also through the Australian Coal Association Research Program (ACARP). The Queensland Government actively supports research in various facets of the black coal industry through: operations of the Department of Natural Resources, Mines and Energy (NRM&E) Safety in Mines Testing and Research Station (Simtars) at its laboratories at Redbank and Mackay (refer to Health and Safety section of this review) participation in the Cooperative Research Centre (CRC) for Coal in Sustainable Development (CCSD) funding of facilities to house the Queensland Centre for Advanced Technologies (QCAT) in Brisbane support for coal-related projects at The University of Queensland. The Queensland Government also supports the Australian Centre for Mining Environmental Research (ACMER, <www.acmer.com.au>) which conducts mining-related environmental research. This centre is also located at QCAT and received a special grant of $2.5 million towards base funding. The Bureau of Mining and Petroleum, forming part of the Department of Natural Resources, Mines and Energy, makes a significant contribution to the mining industry through the development of policies, legislation and strategies associated with the exploration and development of minerals, coal and petroleum. Through the Mines Inspectorate, it also administers legislation dealing with the safety and health of mining industry employees and monitors the mining industry s performance in these areas. Further information is available from the NRM&E web site, <www.nrm.qld.gov.au/mines>. Centre for Low Emission Technology In November 2003, the Queensland State and Commonwealth governments announced the launch of a new initiative, the Centre for Low Emission Technology. In partnership with CSIRO and the coal and power generation industries, the Centre will build upon the existing research capability at the Queensland Centre for Advanced Technologies (QCAT) to coordinate and facilitate targeted research into low emission technologies in the power generation sector. The Queensland Government, industry and research organisations are working closely with the Commonwealth to advance this research objective. Cooperative Research Centre for Coal in Sustainable Development The Cooperative Research Centre for Coal in Sustainable Development (CCSD) was established on 1 July 2001 (web site <www.ccsd.biz>). Its headquarters are located at the Top: Simbot mine investigation robot (Photograph Department of Natural Resources, Mines and Energy) 28 Coal research activities

Queensland Centre for Advanced Technologies (QCAT) at Pullenvale, Brisbane (web site <www.cat.csiro.au>) and it is sponsored by the Queensland Government to the value of $250 000 per year. CCSD has eighteen participating organisations including black coal producers and users, and research and government organisations in Queensland, New South Wales and Western Australia. The centre will invest more than $61 million over a sevenyear period and is focusing its research efforts towards new, clean coal technologies that will lead to more efficient coal utilisation and improved environmental performance, through the reduction of greenhouse gases and other emissions. Research work is conducted under a number of discrete programs, consisting of economic, social and environmental assessment, current power generation, transitional power generation, future scenarios and technology, iron making, and by-products and waste. In 2003, CCSD produced a wide range of publications and fact sheets and its representatives delivered (and published) papers at national and international conferences. Research work was undertaken in collaboration with Japan s Central Research Institute for the Electric Power Industry (<criepi.denken.or.jp>) on coal gasification and ash slagging behaviour and prediction methods. Other projects were progressed in Sweden using a major European pilot-scale blast furnace facility. Collaborative work with CSIRO was undertaken on new methods for power station fly-ash characterisation, the use of biomass and coal co-firing in conjunction with ACIRL and power industry participants, and improving the performance of domestic power stations. Australian Coal Association Research Program (ACARP) The Australian Coal Association Research Program (ACARP) is managed under the direction of the Australian Coal Association (ACA) and funded by all Australian black coal producers, with each contributing $0.05 per saleable tonne of product coal. This program has been in operation since 1992. In 2002 03 total funding of $10.04 million was allocated to projects in the five key areas of interest: underground mining (32 per cent), open-cut mining (35 per cent), coal preparation (18 per cent), coal utilisation (7 per cent) and greenhouse gas mitigation (8 per cent). Most projects also receive funding from other sources and the total committed to all projects was $26.3 million. New projects are selected annually according to industry priorities, with a strong emphasis on safety in underground mines and managing the environmental impact of open-cut operations. Improving maintenance procedures and productivity are also key areas. For example, major improvements in dragline efficiency have been achieved from implementation of the results of ACARP projects. The program is ideally suited to addressing industry problems that benefit from a collaborative approach. For example, research related to problems associated with water use and mine subsidence has benefited from the pooling of experience and knowledge of individual operations. ACARP has committed funding to develop an industry strategy for water use which impacts on all underground and open-cut coal-mine operations, and is also an important component of the successful rehabilitation of spent mining leases. As subsidence can cause problems that may impact on all underground operations, being able to accurately predict subsidence and manage its consequences is critical in maintaining good relationships with neighbouring communities. ACARP has significantly increased the proportion of funding directed toward subsidence management. ACARP also contributes to the work undertaken at the CRC for Coal in Sustainable Development (CCSD) and the CRC for Greenhouse Gas Technologies (CO2CRC), with $4.5 million Coal research activities 29

and $1.8 million respectively committed over the seven-year term of each centre. In addition, ACARP sponsors a number of mine safety related research projects through the Queensland Government Safety in Mines Testing and Research Station (Simtars) near Brisbane. In recognition of the need to maintain technical skills in the industry, ACARP has instituted a postgraduate scholarship in which people who have been in the industry for a minimum of three years can be supported to upgrade their skills by completing either a masters or a PhD degree. One scholarship has been awarded to date. Reports for completed projects as well as information about current projects supported through the ACARP program can be viewed at <www.acarp.com.au>. CRC for Mining Technology and Equipment/CRC Mining The CRC for Mining Technology and Equipment (CMTE) commenced operations on 1 July 1991 under the Commonwealth Government Cooperative Research Centres (CRC) Program, which was founded to strengthen links between industry, research organisations, educational institutions and government. The objective of the CMTE was to deliver safety and productivity enhancing technologies to the Australian mining industry. During 2002 03 CMTE research programs focused on drilling systems, automation of mining systems, geo-sensing, and development of new systems to enhance the reliability of mining equipment. Some research outputs for the coal industry include: novel drilling systems for economically removing gas from coal seams a new rigging and control system for draglines a new cruise-control automation system for draglines new algorithms for emulating core logs from geophysical measurements. CMTE was replaced by CRC Mining which commenced from I July 2003 with funding of $27 million from the Queensland Government over the next seven years and a further estimated $100 million from industry and university partners over the same period. The new CRC Mining will develop systems to streamline processes at mine sites and achieve substantial cost savings through research across three programs as follows: Smart Mining Machines, Smart Mining Systems and Step-Change Mining Systems. CMTE, which was funded under the Cooperative Research Centres Program until 2004, will spend the year from July 2003 completing its research work whilst ramping up the program of CRC Mining. Core participants of CRC Mining include Anglo Coal Australia Pty Ltd, BHP Coal Pty Ltd (BHP Billiton Mitsubishi Alliance), Hamersley Iron Pty Ltd, Rio Tinto s Technological Resources Pty Ltd, WMC Resources Ltd, The University of Queensland and The University of Sydney. Other full member organisations include P&H MinePro Services Australia, Komatsu Australia Ltd and AJ Lucas Group Ltd. Research conducted through CMTE is making a major contribution to improvement in open-cut coal mining efficiency through its Universal Dragline System. This new rigging and control system has been demonstrated in field trials to increase dragline productivity by more than 25 per cent. CSIRO and the Queensland Centre for Advanced Technologies The Queensland Centre for Advanced Technologies (QCAT) is a joint venture between the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the State Government of Queensland. The establishment of the centre at Pullenvale in Brisbane flowed from an agreement between the Commonwealth Government and the Queensland Government to expand and diversify the research and development activities undertaken by CSIRO in Queensland. 30 Coal research activities

QCAT represents a world-class facility for research and development in all aspects of the mining, energy and manufacturing industries, with the goal of increasing the international competitiveness and efficiency of Queensland and Australian resource-based and related industries. The centre provides science and engineering solutions in the areas of mineral exploration, geophysics, coal mining, coal processing, coal utilisation, minerals mining, mineral processing, mine-site rehabilitation and foundry technology. Significant components of the following four CSIRO divisions are located at QCAT: Exploration and Mining; Minerals; Energy Technology; and Manufacturing and Infrastructure Technology. Coal-related research carried out at the centre includes work in: Major activities include applied research and development in mining, minerals processing and coal preparation as well as consulting, commercial software development and support, hardware product marketing and laboratory services. Some current coal-related projects include: underground coal mining geomechanics modeling of underground coal mining roof support systems dragline modeling cyclone technology Further information is available from the following web site <www.jkmrc.uq.edu.au>. mining (assessment of reserves, equipment and automation, productivity improvement and mine-site rehabilitation) coal preparation (slurry splitting, beneficiation and dewatering) coal utilisation, efficient energy use and energy storage sustainable mining, and environmental effects associated with the coal industry. Further information is available from the following web site <www.cat.csiro.au>. Julius Kruttschnitt Mineral Research Centre The Julius Kruttschnitt Mineral Research Centre (JKMRC) is an internationally renowned postgraduate research and technology transfer centre within the Sustainable Minerals Institute at The University of Queensland. The centre aims to develop solutions to technical problems facing the mineral industry, working on projects in partnership with mining and service providers. The JKMRC has undertaken applied research in coal preparation and processing since the mid 1970s. Coal research activities 31

Health and safety Overview During financial year 2002 03, there was a continuation in the improvement in mine safety that has been achieved over recent years with lost time injuries decreasing by 19 per cent, and the lost time injury frequency rate (LTIFR) decreasing by 20 per cent compared with 2001 02. Safety performance (as measured by LTIFR) of Queensland s coal mines has continued to be significantly better than the performance measured at comparable mines in NSW and overseas. There were no fatalities at coal mines during 2002 03. Over the five-year period from 1998 99 to 2002 03 for the Queensland coal industry, there were a total of four fatalities: two in underground mines and two in open-cut mines. This compares with 17 fatalities for the previous five-year period. As recommended in the mining warden s report on the inquiry into the Moura No. 2 explosion in 1994, the Mines Inspectorate was reviewed in 2001 02. The review examined the professional skills and qualifications required by inspectorate officers, the appropriate location and skills distribution of officers, and the role of the Mines Inspectorate under legislation. Implementation of the recommendations from the review have been completed. A major annual simulated mine emergency evacuation exercise was held at the North Goonyella underground coal mine in November 2002. The exercise tested the emergency response capabilities of the mine workforce, the Mines Inspectorate, Mines Rescue and industry, as well as focusing on changeover protocols, data collection and recording, communication channels, and the mines unaided response system support from adjacent mines. A detailed report was prepared and widely distributed throughout the Queensland coal mining industry in December 2002. The Queensland Government continued implementation of the Coal Mine Workers Health Scheme, a health surveillance scheme for coal industry workers, which provides for preemployment and periodic five-yearly health assessments of all workers, transportability of health assessments between sites, and the storage of health data on a centralised health database managed by the Health Surveillance Unit of the Department of Natural Resources, Mines and Energy. Under the duty of care style legislation, site health surveillance is necessary to ensure that statutory obligations are met where persons are exposed to serious health hazards. Statistical summary 1 Fatalities No fatalities occurred in coal mines in Queensland during 2002 03. Permanent incapacity injuries A permanent incapacity injury is any work-related injury or disease that leads to one or more of the following outcomes: the complete loss, or permanent loss of use of any member or part of the body any permanent impairment of any member or part of the body, regardless of any pre-existing disability of that member or part any permanent impairment of physical/mental 1 These data were extracted from Queensland mines and quarries safety performance and health report, 1 July 2002 to 30 June 2003. The full report may be accessed on the Department of Natural Resources, Mines and Energy web site <www.nrm.qld.gov.au> 32 Health and safety Top: Inspection of dragline buckets, Moura Mine (Photograph courtesy of Anglo Coal Australia Pty Ltd)