The Federal Government’s commitment to the Olive Downs Coal Mine was timely with demand for metallurgical coal set to rise said Queensland Resources Council CEO Ian Macfarlane.

The board of the Northern Australia infrastructure Fund has approved a $175 million loan to Pembroke Resources to develop the mine southeast of Moranbah in the Bowen Basin.

Related: Loan facilitates the creation of hundreds of jobs

Metallurgical coal companies are set to benefit from a surge in world steel production, with Australian export volumes expected to increase by around 10 percent to 2023, Mr Macfarlane said.

According to the latest Resources and Energy Quarterly, Australia’s exports of metallurgical coal, which is a necessary ingredient for a majority of the world’s steel producers, are forecast to rise from a 2020–21 low of 171 million tonnes to 186 million tonnes by 2022–23.

The price for metallurgical coal is also set to increase, with the Chief Economist reporting that prices have regained all the losses incurred due to China’s informal ban on Australian coal imports. 

Australian metallurgical coal export values are forecast to rebound from $22 billion in 2020–21 to almost $32 billion by 2022–23. 

Big royalties generated

Olive Downs is expected to deliver more than $5 billion in royalty payments to the State Government over the life of the project said Mr Macfarlane. 

“Royalties paid by resources companies go straight into the state budget to fund important government services and infrastructure for all Queenslanders, so when the resources sector is doing well, so is Queensland,” he said.

Mr Macfarlane commended the company’s commitment to building and operating a coal mine to the highest environmental standards and to providing local jobs and supply chain opportunities.

“This is an opportunity for a new metallurgical coal mine to be built in Queensland using the best technology available to proactively manage and reduce emissions and deliver a whole new level of excellence in workplace health and safety,” he said.

“Olive Downs is exactly the type of project the Queensland economy needs to work and earn its way out of COVID-19, and I congratulate the State Government for giving this project the chance to be assessed and ultimately approved through all the necessary regulatory channels.