Rio Tinto to close Queensland coal mine if extension gets rejected

Rio Tinto to close Queensland coal mine if extension gets rejected

Kestrel coal mine in Queensland, Australia. (Image courtesy of Rio Tinto)

Mining giant Rio Tinto (ASX:RIO) will have to close its Kestrel coal mine in Queensland, Australia, unless the government approves a long-sought extension request.

The operation, Rio's only underground coal mine, was granted an expansion permit in 2013, which was supposed to add 20 years to the mine’s life. However, it seems that the company can only achieve that if Australia lets Rio extend it onto a lease that is not yet approved for mining.

In its submission, Rio Tinto said it has no alternatives. “The proposed action contains an economic resource located in a fixed location. Accessing this resource from an existing mine avoids the need to construct new surface infrastructure (e.g. coal handling and preparation plant, buildings, stockpiles) and avoids new surface disturbance for this infrastructure," the company wrote, according to The Sydney Morning Herald.

The expansion would come at a tough period for the industry, as coal producers worldwide are focusing more on survival than on the development of new mines.

The Bowen Basin, in particular, is struggling with high unemployment (6.5%) as collapsing prices force miners to close up shop and opposition to new coal mines, such as Adani’s $12bn Carmichael in central Queensland, continues to threaten the sector’s future.

As the world’s biggest economies turned towards renewables, such as wind and solar, the situation is likely to get worse. Three major coal miners have already filed for bankruptcy protection this year: Patriot CoalAlpha Natural Resources and Walter Energy. And last week, Arch Coal said it was talking to creditors about restructuring its balance sheet.

Meanwhile, England is shutting down it last standing underground coal mine next month, marking the end of a 300-year industry that once employed over a million workers.