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Soaring oil prices have bumped up the cost of transporting Pike River's coal from an estimated $38 a tonne to $41 a tonne but the company says its overall exposure to fuel rises remains low.
The company announced yesterday it had signed a long-term contract with Nelson-based TNL Group to truck coal from the coal preparation plant 22km to the point of loading on rail at Ikamatua in the West Coast's Grey Valley.
Pike River Coal's chief executive Gordon Ward said the increase on last November's estimate was not unexpected given the escalating cost of fuel.
"Looking forward at oil prices they're high but they'll come back down. We don't have a very large exposure to fuel costs. It's a much smaller proportion of fuel costs than what alternatives could have been," he said.
The company last year abandoned a plan to truck coal to Greymouth and from there to New Plymouth by ship which would have been more expensive.
The $41 figure includes trucking, Solid Energy's charge for the rail journey to the Port of Lyttelton and loading when there.
"Both TNL and Solid Energy provide for an escalation in fuel costs - there are very high fuel prices at the moment. Obviously if fuel prices go down our costs go down."
At mine production averaging about 1 million tonnes a year from the middle of next year, 10 truck and trailer units carrying 30 tonnes of coal would be operating each day. All loads would be covered to ensure coal dust was contained, Pike River said. Two main trucking route alternatives were considered - the northern 22km route to Ikamatua, and a southern 41km route to an existing rail loading facility at Stillwater.
The capacity, environmental and commercial advantages of the much shorter trucking route to Ikamatua determined the decision. Pike River on Tuesday announced it had been granted resource consents to build and operate a $12 million rail loading facility at Ikamatua. The facility is due to be built by December.
Earlier this month Pike announced it had settled the sale price for its coal with two Japanese steel mills and its Indian shareholders at US$300 ($397) a tonne for deliveries in the year to the end of March.
Ward said costings of mining, processing and transport would be done in the two months after the 2.3km tunnel hit coal, due in July.
Recruitment was being stepped up and the workforce would double to 70 over the next few months and hit around 150 when the mine was in full production. Most interest in mining and trades jobs was coming from within New Zealand and South Africa.
"We're competing with Australia but we have lifestyle advantages that Australia might not be able to offer," Ward said.
