OREANDA-NEWS. Chinese-owned mining firm Yancoal has received final approval to expand its Moolarben coal mine in Australia's New South Wales state, with first coal from the expansion now expected in mid-2016.

The stage 2 expansion of Moolarben allows for one additional open-cut pit and two additional underground mines on the site. Yancoal plans to produce coal from the new open-cut pit from mid-2016. It expects to begin development of the new underground mines next year, but will not reveal dates for first coal from these operations.

Moolarben, in NSW's western coal field region, produced 3.4mn t of saleable thermal coal from 4.5mn t of run of mine (ROM) during January-June. This annual ROM run rate of 9mn t/yr will increase to 13mn t/yr when the stage 2 open-cut pit ramps up to full capacity and to 17mn t/yr once the underground mines come on stream. Total saleable production is forecast to rise to 12mn t/yr of coal once the entire expansion ramps up to full scale.

Yancoal is one of just a few firms currently willing to invest in new thermal coal mining capacity in Australia, with many of the major producers cutting all expansions and trying to sell existing assets amid weak prices and oversupply. The Moolarben expansion will be funded partly by the $1.8bn in capital that Yancoal raised at the end of last year. Additional funding will come from major shareholder China's state-controlled Yanzhou.

Yancoal has five years under the terms of the approval to begin work on stage 2 or the approval lapses. The approval process has taken seven years, with Yancoal originally planning to begin construction in 2009 a year after the mine expansion application was submitted.

Australian export thermal coal prices peaked at $130/t fob Newcastle for high-grade 6,000 kcal/kg NAR coal in early 2011, before falling to just $57.90/t at the end of last week.

Yancoal owns 81pc of Moolarben, while South Korea's state-controlled Kores has 9pc and Japanese trading firm Sojitz 10pc.