Stanmore Resources (ASX:SMR) has decided to halt operations at its Mavis underground coal mine in Queensland following a review of the economic viability.
The producer says it undertook a comprehensive strategic review which determined that, given its relatively short mine life, the Mavis underground project has proven to be uneconomic under current market conditions and coal prices.
This is due to comparatively higher costs driven, among other reasons, by the challenging ramp up and lower production volumes achieved to date.
CEO Marcelo Matos said in April metallurgical coal prices decreased in the March quarter as supply conditions from East Coast Australia improved towards the later part of the quarter, while demand weakness persisted globally.
Coking coal, which is used in steelmaking, dipped below US$300 ($452.35) per tonne in March. The price averaged around US$278, which was a 12.2% decline from February, according to Focus Economics.
This was the lowest level since August 2023 as business conditions in China’s steel sector continued to decline for the 13th consecutive month. Focus Economics says demand for Australian coal was likely further hurt by strong output in China and rising Mongolian exports.
Stanmore acquired full ownership of the mine, which is part of the Millennium Complex, in December 2023 from joint venture partner M Resources.
The project is located adjacent to the Poitrel mine and shares access to Red Mountain coal handling and preparation plant, and coal loading and transport infrastructure.
Stanmore will cease operations at the end of June followed by closure and sealing of the Mavis underground pit.
The Millennium Complex as a whole is expected to reach steady state minimum expenditure care and maintenance by the end of Q3.
Discussions with mining services contractor PIMS and associated consultation with the workforce are underway.
Stanmore is not expecting the closure to impact its 2024 production guidance of 12.8 to 13.6 million tonnes saying its core operations at South Walker Creek, Poitrel and the Isaac Plains complex are expected to continue to perform strongly this year.
During the March quarter, 119,000 tonnes of coal was mined from underground operations at the Millennium Complex, with 90,000 tonnes of saleable coal produced and net shipments of 101,000 tonnes.
Stanmore says the potential Millennium underground development option will not be affected by the decision to close the Mavis mine, but it will still be subject to the company’s capital allocation and prioritisation strategy.
Write to Angela East at Mining.com.au
Images: Stanmore Resources
