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Anglo American approves development of Grosvenor metallurgical coal project

World Coal,

 Anglo American has approved the Grosvenor metallurgical coal project in the Bowen basin in Queensland, Australia. The greenfield Grosvenor project is situated immediately to the south of Anglo American’s Moranbah North metallurgical coal mine and is expected to produce 5 million tpa of metallurgical coal from its underground longwall operation over a projected life of 26 years. Capital expenditure for the Grosvenor project is forecast at US$ 1.7 billion, representing a highly competitive capital intensity ratio for the project.

The Grosvenor project is 100% owned by Anglo American and forms a major part of the group’s strategy of tripling production of metallurgical coal from its Australian assets by 2020 using a standard longwall and coal handling and preparation plant (CHPP) design model. In its first phase of development, Grosvenor will consist of a single new underground longwall mine, targeting the same Goonyella Middle coal seam as Moranbah North. It will process its coal through the existing Moranbah North CHPP and train loading facilities. A pre-feasibility study for expansion by adding a second longwall at Grosvenor is under way.

Grosvenor is expected to benefit from operating costs in the lower half of the cost curve. Synergies are also expected from the integration of Grosvenor with Moranbah North, including from blending and yield improvement, while a continued focus on improving longwall productivity to 100 cutting hours/week across the business’ underground operations will deliver further value.

According to Seamus French, CEO of Anglo American’s metallurgical coal business: “Our longwall design model will enable us to replicate our approach across our expansion footprint, ensuring the transfer of best practice project efficiency, cost control and risk mitigation. We have also now received confirmation of our development rights from the Queensland Government for the expansion of the Abbot Point coal port – a dedicated export facility that would have the capacity to accommodate the growth from our Moranbah hub.”

First development coal from Grosvenor is expected in 2013, while the commissioning of the longwall is expected in 2016. Such project timings are contingent upon the receipt of the appropriate licences and permits. Grosvenor received approval of its Environmental Impact Statement, the project’s Environmental Authority is in train and the key Mining Lease is anticipated in Q1 2012.

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