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Regional insight: Victoria, Melbourne and the global mining industry

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World Coal,


Home to BHP Billiton and Rio Tinto, the Australian state of Victoria and its capital Melbourne have achieved an influential place in the global mining industry – despite little actual mining actually taking place there. Jonathan Rowland discovers why.

The Australian state of Victoria has much going for it, according to Geoffrey Conaghan, the state’s representative in the UK. It comprises only 3% of Australia’s landmass but accounts for 25% of the country’s GDP. It is also the only state with a AAA-rated economy, while its capital, Melbourne, is a major financial hub and home to two of Australian’s top four banks: ANZ and National Australia Bank.

This economic success and role of Melbourne as a centre for Australian finance goes part of the way to explaining why the state – and its capital in particular – plays such an important role in the mining industry. Two of the world’s mining majors – BHP Billiton and Rio Tinto – are headquartered in the city, while Glencore also maintains an office there. And, although the state has little actual mining activity in comparison with say, Queensland or Western Australia, the Melbourne Mining Club has become a global forum for leaders and executives in the resources sector, regularly attracting speakers from the world’s largest mining companies.

But finance is only part of the story: Victoria has also been successful in shaping its economy around R&D. “With our high labour costs, we needed to do things more cleverly to remain competitive,” said Conaghan. And the state’s list of developments is impressive: WiFi, aircraft black boxes, cochlear implants and polymer bank notes all began life in the southern Australian state.

Technology and education

That tradition of technological innovation also exists in the mining industry. “Victoria understands that its strength [in the mining sector] comes from the location of the mining company headquarters in Melbourne and its commitment to education,” explained Conaghan.

For example, Victoria University offers a course specifically looking at the design of explosion-resistant electrical systems in underground coal mines, while Monash University established its Bachelor of Mining Engineering degree this year in partnership with base metal miner, MMG, and gold miner, Newcrest. Marrying practical training with the research and education provided by Monash’s School of Geosciences to produce “industry-ready graduates” was a key aim for setting up the course, explained Professor Tam Sridhar, former dean of engineering at Monash.

This blend of financial and technological leadership made Melbourne a logical choice for hosting the inaugural IMARC – the International Mining and Resources Conference – earlier this year. Held with the support of the Victorian government and Australia’s three mining industry associations – AusIMM, Austmine and the Minerals Council of Australia – the show aimed to bring together “the entire mining industry” – mining leaders, policy makers, financiers, technical experts, innovators and educators: an ambition perhaps only possibly in Australia’s Second City.

The Victorian coal industry

Beyond the glamour of IMARC and the Melbourne Mining Club, however, lies Victoria’s vast reserves of lignite – some 7% of the world’s resources, according to Conaghan, placing the Australian state fifth behind Germany, Russia, Turkey and the US in terms of the size of its deposits. Development of the Victorian lignite reserves began in earnest in 1921 with the establishment of the State Electricity Commission of Victoria. The Yallourn power plant and lignite mine in the Latrobe Valley followed soon after and began providing power to Melbourne in 1924.

Since then, lignite has become the principle source of energy in the state, providing 90% of the state’s electricity. The huge deposits of lignite in the Latrobe Valley and the ease with which they can be mined – seams are often only 10 – 20 m below the surface and can be up to 100 m thick – make the coal one of the cheapest energy sources available.

Even in these vast lignite fields, technology is making its mark. Because of its high moisture content, which ranges from 48 – 70%, burning Victoria’s brown coal is much more emissions intensive than other forms of power generation. Yet it is remarkably free from other impurities – e.g., ash, sulfur, heavy metals and nitrogen – when compared to lignites found in other areas. Drying out the coal and then pelletising it into a transportable form therefore offers the potential to turn Victoria’s lignite into an exportable product or a feedstock for various exportable products (e.g. liquid fuels, fertilizers, chemicals and coal for steelmaking). This could be particularly relevant with the tightening of emissions regulations around the world – and particularly in China – which is forcing companies to source cleaner coals.

The Advanced Lignite Demonstration Program

The Advanced Lignite Demonstration Program (ADLP) was designed to do just this: prove technologies that are able to produce high-value products from Latrobe Valley lignite. Three projects were recently announced with a total AU$75 million in grants awarded.

The first project to receive ALDP funding (AU$30 million) was Coal Energy Australia’s (CEA) development of an AU$143 million demonstration plant producing fertilizer, oil and coal suitable for steelmaking. The plant will be built within Energy Australia’s existing site in Yallourn North with construction expected to begin next year. The plant should then reach commercial-scale operations in 2017.

The second project is Ignite Energy Resources’ (IER) project to demonstrate its Catalytic Hydrothermal Reactor (Cat-HTR) technology. Receiving AU$ 20 million of ALDP funding, the technology chemically transforms lignite into two high-energy products: synthetic crude oil (syncrude) that can be processed in existing oil refineries; and metallurgical-grade (PCI) coal.

IER’s technology has already successfully converted samples of Indonesian coal into syncrude and metallurgical coal at its existing Cat-HTH pilot facilities, following a memorandum of understanding with Indonesian coal producer PT Bukit Asam (Persero). “The successful demonstration of the commercial Cat-HTR reactor for lignite holds tremendous potential for future employment opportunities in Victoria,” said Dr Len Humpheys, IER’s CEO at the time of the award. “We envisage significant new revenue streams and export opportunities.”

The final project will see Shanghai Electric Australia Power & Energy Development (SEAPED) develop an AU$119 million demonstration plant for the production of coal briquettes for export to China at Loy Yang A power plant. The briquettes will be used to fuel a power plant in Shanghai but, if successful, a commercial-scale plant could potentially supply Latrobe Valley generators.

“The project […] is about making progress towards clean ways of capitalising on this rich resource and securing a bright future for the Latrobe Valley and its community,” said Russel North, Victorian minister for energy and resources at the time of announcement. SEAPED has already demonstrated the process in China on Loy Yang coal, showing significant emissions reduction in comparison to other lignite coals. The dried product provides a product similar to many hard coals but with lower ash and sulfur levels.

A bright future

With its mix of financial clout and technical expertise, Victoria looks well placed to weather the worst of the storms facing the global mining industry – and to emerge stronger. You certainly wouldn’t bet against such an innovative state. Perhaps it is not too far fetched to see the state’s upgraded lignite one day crossing oceans, as the hard coal of Queensland and New South Wales does now.

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Read the article online at: https://www.worldcoal.com/special-reports/12112014/world-coal-regional-insight-victoria-melbourne-and-the-global-mining-industry-coal1562/

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