Two workers show the size of the coal seams in the greenfield Karin Basin tenement.

Two workers show the size of the coal seams in the greenfield Karin Basin tenement.

Japan’s Itochu Corporation has signed a deal with Queensland company Vitrinite to provide financial backing for a new coking coal mine near Clermont in Central Queensland.

Itochu will fund development of Vitrinite’s greenfield project in the Karin Basin tenement, which contains large quantities of high-quality coking coal.

Coking coal is used in the production of steel (not for power generation), and is currently in high demand from steel mills worldwide.

Commenting to the Australian Financial Review, Vitrinite managing director Nick Williams said there was strong overseas interest in investing in Queensland coking coal (also known as metallurgical coal).

‘Metallurgical coal is seen as a different commodity – it’s coal for steel,’ Mr Williams said.

‘It is double or triple the price [of thermal coal] and it’s for steel manufacturing as opposed to coal for power.

‘We’ve just done a roadshow in Asia and there was a lot of interest in metallurgical coal.

‘It’s a no brainer.’

Itochu, Japan’s second largest international trading company, will fund a feasibility study and business case for the Karin Basin project, with an option to fund the subsequent production phase.

Mr Williams said Vitrinite believed Karin Basin was a unique resource able to meet a global market demand.

‘There needs to be the next generation of coking coal projects,’ he said.

‘We see a gap in the market for our high-fluidity coking coal.

‘We have literally only explored about 5% of our project, but we’re confident we’ll have a couple of hundred million-tonne resource.

‘We feel like we’re in a unique position.’

The Karin Basin tenement is located in the Bowen Basin, which already has rail infrastructure to transport coal to the Queensland coast for export.

TIQ has been working with Vitrinite for some time to secure backing for the Karin Basin project, including raising the company’s profile in the international investment market and providing market analysis support.

Boosting smart foreign investment in Australia is one of the key goals of the Queensland Trade and Investment Strategy 2017–2022.