City Beat: Qld’s $1 coal king makes another bet on sector’s future

The man who turned a $1 investment in a struggling Queensland coal mine into a billion-dollar asset is making another bet on the sector by acquiring two more mines.

Bowen Coking Coal chairman Nick Jorss. Pic Annette Dew

THE man who turned a $1 investment in a struggling Queensland coal mine into a billion-dollar asset is making another bet on the future of the sector amid soaring demand from Asia.

Bowen Coking Coal chairman Nick Jorss as then head of Stanmore Coal paid a dollar for the mothballed Isaac Plains coal mine in 2015 before transforming it into an operation employing hundreds of workers.

This week Jorss announced ASX-listed Bowen Coking Coal would acquire New Hope Corporation’s 90 per cent interest in the Lenton Joint Venture, the owner of two coal mines in the northern Bowen Basin for $20 million.

The Burton mine operated for almost 20 years before then owner Peabody Energy closed it due to a slump in coal prices. Lenton purchased the mine in 2017 for $14.4m.

The acquisition will create a hub of three mines for Bowen Coking Coal in the northern Bowen Basin that will share transport and other infrastructure. Bowen Coking Coal earlier this year raised $2.25 million to buy the nearby Broadmeadow East mine that has been dubbed “Stanmore Mark II.”

“There is already infrastructure in place to operate the Burton mine including a wash plant, camp and road,” says Jorss. “You are looking at a replacement value of $300m so we consider this a very good deal.”

Bowen Coking Coal chairman Nick Jorss backs coking coal’s future. Picture: Annette Dew

The mines, which are benefiting from soaring prices for coking coal, are expected to employ more than 300 people when they come on line over the next 18 months.

Australian export hard coking coal prices have increased around 90 per cent since March “The forward market for coking coal is looking good with strong steel making demand from Japan and Korea,” he said.

Jorss says the acquisition was “transformational” for Bowen Coking which continued to look for related investments. “Some of the big boys are getting out so we see a lot of opportunities for a Queensland company like ours,” he says. The acquisition will be funded through a $15.4m equity raising, including a $7m placement to richlister Brian Flannery.

Last week, the company secured preferred bidder status for the mothballed Bluff mine in central Queensland underscoring its ambition to take over underperforming assets amid a surge in coking coal prices. “We will be working fast to secure exposure to strong and sustained coking coal prices. and long-term demand is forecast to increase substantially driven by growth in global steel production,” he says.

“The Burton acquisition creates an exciting opportunity to materially enhance the scale and diversity of Bowen’s coking coal assets, capitalise on the significant infrastructure acquired, and set up a processing hub to service the company’s adjacent assets.

Ord Minnett Queensland state manager David Lane says the acquisition was attractively priced, with Bowen Coking Coal acquiring a quality asset that will provide synergies with its adjacent mining operations. Bowen Coking Coal shares dropped 4 per cent to 9.6 cents Thursday.

PAY DAY FOR SUBBIES

Almost $4m in outstanding debts has been returned to subbies and suppliers amid a crackdown by Queensland‘s building industry watchdog on financially recalcitrant building firms.

The Queensland Building and Construction Commission (QBCC) said 750 investigations by the watchdog last financial year had resulted in $3.9m being repaid. QBCC commissioner Brett Bassett said it was important subbies were confident they were paid for the work they did.

Mr Bassett said the watchdog operated a monies-owed complaint service that subbies could use to lodge claims for unpaid work. “These amounts may not have been paid had the QBCC not been contacted,” says Bassett. In 2019/20 $5,909,313.39 was returned to subbies.