New Hope Group began in Queensland, Australia in 1952, when the company was formed to undertake underground coal mining in the bustling industrial centre of the state, Ipswich. Today, New Hope is a diversified energy company listed on the ASX and one of Queensland’s largest regionally-based employers, with a direct workforce of more than 600 people along with a wider reach of 3,000 jobs through suppliers and contractors. Connecting New Hope’s longstanding past with its present position in Queensland is a set of lasting values that have permeated through the company since inception. New Hope’s managing director Shane Stephan lists the four most enduring company values as: Safety, accountability, integrity and resilience.
Resilience is one of the most important values for any resources company because commodity prices go up and down, so you need to maintain resilience within the organisation,” explains Stephan. “This means resilience in a financial sense, within human resources and also in the mineral resource itself.”
A diversified energy company
Having started as an underground coal miner, it wasn’t until the 1980s that New Hope shifted into open cut coal mining and moved to totally vertically integrate the business through an investment in the coal terminal at the Port of Brisbane. Since then, the company has continued to focus on open cut coal mining.
“We are very vertically integrated for a coal mining company. We own our drill rigs, we have our geologists and engineers, we get our own approvals, do our own mining, coal processing, marketing and we own the coal shipping terminal at the Port of Brisbane.”
The investment in the coal shipping terminal at the Port of Brisbane back in the 1980s was the first step in New Hope’s vertical integration strategy, which has proven to be highly successful as today the only part of the coal production chain that New Hope doesn’t own is the rail.
While becoming self-reliant in the coal market, New Hope also followed a strategy of sector diversification under the premise that over-exposure to a single market, particularly one as volatile as the coal market, could be damaging to the company’s long-term prospects.
For example, in 2012 New Hope invested in a conventional oil company called Bridgeport Energy, which proved to be a shrewd move as the coal price downturn of the time was to further deepen, reaching a new nadir in 2016.
“We invested in that operation to learn that industry, but also because it provides a natural hedge, particularly as we use a lot of diesel for our truck fleet across our coal mines.
Therefore, having an investment in a conventional oil company provides a natural financial hedge on oil price which is one of our major cost drivers, Stephan reasons.
Along the way, New Hope has also developed its own agricultural business called the Acland Pastoral Company (APC), which operates approximately 10,000 hectares of land around the company’s largest operation New Acland on Queensland’s Darling Downs.
The pastoral operation is also highly integrated running a herd of around 5,000 cattle and roughly 2,400 hectares of crops that are used for the Company’s own stock feed requirements with excess sold locally. Approximately 500 hectares of this operation is rehabilitated mined land. The Company is a world leader in its progressive rehabilitation techniques which returns mined land to useable cattle grazing pastures immediately behind mining operations.
“Through APC, we see ourselves as a custodian of that land and we are proud to say we put the land we own to good use before during and after mining – apart from being the right thing to do it also makes good business sense.”
Thermal coal operations
Despite following a clear diversification strategy in recent years, Stephan underlines thermal coal mining as New Hope’s predominant line of business. The thermal coal business has three key operations, with the bulk of production exported to Asian markets, along with a smaller domestic market.
New Hope’s priority Queensland operation is New Acland, which has been producing thermal coal since 2002 and currently runs at a rate of approximately 5 million tonnes per annum. However, New Acland is currently nearing the end of Stage 2 of its mine life and the company is working on gaining approval for Stage 3 of the operation.
The mine lease application for Stage 3 was initially rejected by the Land Court, but after seeking judicial review of the ruling in the Supreme Court, the extension plans for New Acland were given a lifeline with the Supreme Court overturning the Land Court’s decision.
“For New Acland stage 3, we remain very confident of obtaining those approvals. The key concern for us is that we need to progress in a smooth manner from Stage 2 into Stage 3, maintaining production at a steady rate so we can maintain employment at the site and of course maintain supply to our customers.”
New Hope employs around 300 people directly through the operation, and a further 700 people rely on New Acland for employment. Furthermore, the operation injects more than AUS$110 million into the Darling Downs economy each year and over $300 million into the broader south-east Queensland economy each year, underlining its importance in the region.
In August 2018, New Hope opted to increase its stake in the Bengalla mine in New South Wales through the purchase of Wesfarmers’ 40% stake in the joint venture operation. The $860 million acquisition will take New Hopes ownership of Bengalla to 80%, and starts a pre-emptive process where the remaining co-venturers Mitsui and Taipower are able to enter in at that same price.
Bengalla is an important and growing part of New Hope’s coal portfolio according to Stephan, as the operation produces roughly 9 million tonnes per annum of thermal coal which is sold into export markets in Japan, Korea, Taiwan and other Asian markets.
“We also own a smaller operation called Jeebropilly which produces around 600,000 tonnes of coal per annum and is the last coal mining operation in the West Moreton district.” New Hope has been mining in the district for a long time but will cease to operate there in mid-2019 when Jeebropilly completes its mine life.
A custodian of the land
The upcoming mine closure at Jeebropilly brings into focus New Hope’s commitment to rehabilitation of the land surrounding its operations once they reach maturity. “Ensuring that the land post-mining has a viable and sustainable use post-mining is critical,” Stephan stresses.
“We’ve done a lot of work in progressive rehabilitation and having that rehabilitation monitored and evaluated by third parties, such as the University of New England and the University of Southern Queensland, has assisted us in improving our rehabilitation practises and ensuring sustainable land use post-mining.
“Also, from a social point of view we always try to employ people locally. That’s actually been a major competitive advantage for us in the recruitment of high level, talented people, because a lot of mines in Queensland are fly-in fly-out.
“Whereas, our employees live locally and they are able to go home to their families at night. These are some of the characteristics that make us a touch different from most of our peers.”
Exploration and development
The mid-term future of New Hope’s coal business looks to be assured judging by its packed exploration portfolio, which is headed by two prospective projects at Colton and Lenton.
Colton is a small coking coal project near Maryborough which has had its mining lease and mining approval granted and is now awaiting the results of a re-financing process that is taking place for Wiggins Island Coal Export Terminal (WICET), the coal port which it would use for exports out of the city of Gladstone.
“Lenton is a project of about 1.5-2 million tonnes per annum of both metallurgical and thermal coal, approximately split 50:50.
“If we do get the approvals to progress, we should be able to get that operation up and running quite quickly, because approvals are in place already at the adjoining Burton mine and most of the approvals are in train to progress with Lenton.”
New Hope acquired the nearby Burton mine from Peabody, primarily to gain access to its already established infrastructure, which includes a railway, a coal operation plant, accommodation village along with electrical and water infrastructure.
The company also has four projects in the North Surat region of Queensland and is looking at development options for these potentially large open cut coal resources, although they are dependent on the development of the ‘Southern Missing Link’, a 214 km length of rail connecting the Western Railway system near Wandoan to the Moura Railway system near Banana.
With a history in Queensland stretching back over 70 years, and in its ongoing role as a responsible steward of the environment it operates in, New Hope has proven to be a vital social and economic stakeholder in the state, and with a detailed exploration portfolio in the region this is set to continue into the foreseeable future.