Unlike the many striking british coal miners in 1984, those at the haig colliery in cumbria chose pickaxes over pickets. if the west cumbria mining project goes ahead, 500 coal miners will again get their chance. though the local council did approve it on friday, uk housing secretary robert jenrick has reserved his right to veto the plan.
Wcms woodhouse colliery coking coal mine is slated to begin production in mid-2021. environmental campaigners against the carbon-heavy fuel are furious. locals would welcome the employment. what matters most is how efficient this project is versus foreign rivals.
To call coal a four-letter word understates the passions involved. britain has already pledged to become carbon-neutral by 2050. green activists have successfully delayed this 160m (so far) coal project for several years, despite the local council approving the planning application twice. so far activists have beaten back the threat from dirty coal. the last coal mine in england stopped operating this year.
Wcms project does not produce thermal coal for power plants, which has substitutes from renewable sources. instead, it will mine coking coal used in the making of steel. wcm argues that its output eventually 3.1m tonnes annually will replace imported coal. that has generated carbon emissions travelling by sea from us miners such as warrior met coal, with cash costs (not including investment) about $90 per tonne. premium coking coal trades around $110 per tonne, depending on the region, down by half since 2017. wcm expects prices of more than $130 in the year or so ahead.
Those numbers suggest that mining coking coal, unlike much more profitable iron ore, is not a get-rich-quick scheme. wcm plans to mine under the cumbrian coast, sending the coal first by a 2.2km conveyor belt to a rail loading site then on to a port or to uk industrial customers. wcm claims it can compete with imported coal. perhaps so. documents filed in the planning process pointed to a five-year full cost recovery, but frankly that looks optimistic unless coking coal prices rise significantly.
Some want to stop this project for environmental reasons, economics might do the trick instead.
Lex recommends the fts due diligence newsletter, a curated briefing on the world of mergers and acquisitions. click here to sign up.