Sojitz Corporation is exploring all options for restarting production at its Crinum underground mine in Queensland, Australia, following a series of setbacks including a fatal incident, contractual disputes, and delays.
Key Points:
- Production Halt: Crinum’s restart has been stalled since a roof fall incident in September 2021, claiming one life and injuring another.
- Contract Dispute: Sojitz’s mining contractor, Metarock Group, terminated their contract in October 2022 due to limited access to the mine, sparking a dispute settled in February 2023.
- Next Steps Unclear: Sojitz is reviewing options, including potentially becoming the operator itself. The mine website suggests approval to do so in 2023.
- Climate Goals: Sojitz is considering all options to meet its climate goals, including potentially selling its Queensland thermal coal mines.
Background:
- Sojitz acquired Crinum and its open-cut sister mine Gregory in 2019, aiming to restart production after BMA halted operations in 2016.
- The Gregory-Crinum complex had a 6.0 mt/y hard coking coal capacity before closure.
- Sojitz refurbished processing facilities and initiated development work at Crinum.
Challenges and Delays:
- The fatal accident and subsequent investigation significantly delayed the restart.
- The dispute with Metarock further stalled progress, with Metarock citing lack of access and claiming a force majeure event.
- Sojitz disputed the termination and initially refused to pay for equipment recovery, leading to a settlement in February 2023.
Future Unclear:
- Sojitz is considering its options, including becoming the operator and potentially selling assets to align with climate goals.
- The mine website suggests potential approval for Sojitz to operate Crinum in 2023.
- Production volumes and future plans remain unclear due to Sojitz’s policy of not publishing production numbers.
Metarock’s Position:
- The company suspended trading on the ASX, pending a capital raising announcement.
- It used proceeds from equipment sales at Crinum for debt reduction and incurred a financial impairment charge related to the contract termination.
- Metarock views the termination as reducing its coal operations’ risk profile.
Overall, the future of Sojitz’s Crinum mine remains uncertain. The company faces challenges in restarting production after various setbacks, and its long-term plans for the asset are unclear amidst climate change considerations.
