OREANDA-NEWS. The Australian federal government has granted approval for US energy firm AMCI and Australian independent Bandanna Energy to develop their 17mn t/yr open-cut and underground South Galilee thermal coal project.

The approval comes as the voluntary administrators of Bandanna continue their search for buyers for all or part of the company. They began looking last month, but are still seeking expressions of interest from those looking to buy assets or return the company to operation as a going concern.

South Galilee is dependent on others developing coal mines in the Galilee basin so that it can use their infrastructure. But work on the other projects, including Indian-Australian joint venture GVK Hancock's 32mn t/yr Alpha and 30mn t/yr Kevin's Corner mines, Indian firm Adani's 60mn t/yr Carmichael mine and Australian producer Waratah Coal's 56mn t/yr Galilee basin coal project, have stalled as the economics are unviable in the current weak coal price environment.

The Galilee's potential reserves underpin original plans for more than 150mn t/yr of new coal mining projects by 2020. The development of the region could push a large amount of new coal supplies into the market, weighing on prices. Galilee coal is slightly lower quality than that usually shipped from Queensland.

Other developers interested in the Galilee basin include Brazilian mining firm Vale and China's Meijin.

Australian lower grade, high-ash coal is currently assessed at $45.17/t fob Newcastle, with it below $50/t since late March and down from $90/t in early 2012 when the impetus to develop the Galilee was much stronger.