Global prices restrict Bathurst's Denniston plans

Bathurst Resources may have cleared its last regulatory hurdle to begin mining on the Denniston plateau above Westport, but until global coking coal prices rise its ability to mine and export commercial quantities remains hamstrung.

While environmentalists and Bathurst have spent millions of dollars in various courts making their cases, the mine's future, or not, comes down to demand from China or India.

On Wednesday, Conservation Minister Dr Nick Smith issued Bathurst with an Authority to Enter and Operate the Denniston site, which means Bathurst is now able to proceed with initial work on site.

Having revised and trimmed back its mining schedule recently, Bathurst plans to begin infrastructure site work in July, with expectations 35,000 tonnes of displaced coal will be sold domestically, along with domestic coal from its three other domestic South Island mines.

Forest and Bird, whose court challenges to Bathurst's consents delayed the mine start-up by about two years, said the authority to operate the mine should not have been given, as the low coal price could see Bathurst begin work, but then ''go bust''.

Forestand Bird advocacy manager Kevin Hackwell cited Dr Smith's recent decisions to decline both the Southland monorail proposal and Fiordland tunnel, because the economics of the projects did not stack up and taxpayers could end up footing a bill, should also apply to Bathurst.

''Bathurst's share price fell to an all-time low of 5c a share on Tuesday. Just as with the monorail, there is a real risk the company will do irreparable damage to the Denniston plateau, and then go bust,'' Mr Hackwell said.

A fortnight ago, Solid Energy announced 187 jobs from its adjacent Stockton coal mine workforce of 640 were to go, followed last week by Oceana Gold laying off 60 of its 240 Reefton gold-mining staff.

Dr Smith said the access approval would be welcome news for the Buller community, which had had a ''tough run of redundancies in recent weeks''.

Bathurst chief executive Hamish Bohannan said activities were to start on July 1.

That would include site clearing, establishing water management dams and drainage systems, installation of coal stockpile areas, site roads and basic infrastructure, including a site office and amenities.

''Coal production areas will be cleared and other earthworks will be undertaken to prepare the site to transition to steady state operations when economic conditions warrant full commercial production,'' he said in a statement.

Coal recovered during initial construction during the next six months, about 35,000 tonnes, would be sold to the domestic industrial market, he said.

''Some coal will also be dispatched for trials to coke and steel producers in Japan, India and other Asian markets,'' Mr Bohannan said.

Dr Smith said the authority to operate was for a six-month period, then Bathurst would have to submit for another 12-month work programme for the Department of Conservation (Doc) to consider, which would be an annual requirement during the mine's entire life.

Because of the global downturn, Bathurst had revised its mining schedule to reduce the area to be mined during the first two years, from 62.2ha to 19.3ha, reducing the coal take from 558,000 tonnes to 75,000 tonnes.

Bathurst planned to ramp up its operations when market conditions were more favourable.

Bathurst had lodged a bond with the Buller District Council, West Coast Regional Council and Doc. The company will also be making its first payment as part of the $22 million compensation package to Doc, spread over seven years, as agreed under the access arrangement last May.

• The compensation is tagged for pest and predator control over 25,000ha of the Heaphy River catchment, in the Kahurangi National Park, 4500ha on and around the Denniston Plateau and for historic projects on the plateau.

- simon.hartley@odt.co.nz

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